exv10w11
Exhibit 10.11
Confidential Portions in Exhibit C omitted and filed separately with the Securities and
Exchange Commission. Bullet points denote omissions.
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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In re NORTEL NETWORKS CORP.
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Civil Action No. 05-MD-1659 (LAP) |
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SECURITIES LITIGATION
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This Document Relates To:
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ALL ACTIONS.
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STIPULATION AND AGREEMENT OF SETTLEMENT (NORTEL II)
This Stipulation and Agreement of Settlement (the “Stipulation”) is submitted in the
above-captioned In re Nortel Networks Corp. Securities Litigation, Master File No. 05-MD-1659 (LAP)
(the “Nortel II U.S. Action”), pursuant to Rule 23 of the Federal Rules of Civil Procedure.
Subject to the approval of the United States District Court for the Southern District of New York,
this Stipulation is entered into among Lead Plaintiffs and Class Representatives Ontario Teachers’
Pension Plan Board and the Department of the Treasury of the State of New Jersey and its Division
of Investment (hereinafter “Lead Plaintiffs”) on behalf of themselves and the U.S. Global Class (as
defined herein), and defendant Nortel Networks Corporation (“Nortel”), by and through their
respective counsel.
The following separate class actions in Ontario and Quebec, raising claims on behalf of
persons who purchased Nortel Securities (as defined herein), are also being settled
contemporaneously as part of a single settlement of those actions and the Nortel II U.S. Action
on the terms herein: Skarstedt v. Corporation Nortel Networks, Superior Court of Quebec,
District of Montreal, No: 500-06-000277-059 (the “Quebec Skarstedt Action”) and Gallardi v.
Norte?
Networks Corporation et al., Court File No. 05-CV-285606CP (Ont. Sup.Ct. J.) (the “Ontario Gallardi
Action”) (collectively, the “Nortel II Canadian Actions”).
A separate class action brought on behalf of persons who purchased Nortel common stock or call
options on Nortel common stock or wrote (sold) put options on Nortel common stock from October 24,
2000 through February 15, 2001, inclusive (the “Nortel I Class Period”), captioned In re Nortel
Networks Corp. Securities Litigation, Consolidated Civil Action No. 01 Civ. 1855 (RMB) (the “Nortel
I U.S. Action”) is also pending in the United States District Court for the Southern District of
New York, and is being settled contemporaneously herewith.
Also being settled contemporaneously herewith are the following separate class actions brought
in British Columbia, Ontario and Quebec, as part of a single settlement including the Nortel I U.S.
Action: Jeffery, et al., v. Nortel Networks Corp., et al., Supreme Court of British Columbia,
Vancouver Registry, File No. S015159 (the “B.C. Jeffery Action”); Frohlinger v. Norte/ Networks
Corp., et al., Ontario Superior Court of Justice, Court File No. 02-CL-4605 (the “Ontario
Frohlinger Action”); and Association de Protection des Epargnants et Investisseurs du Quebec v.
Corporation Nortel Networks, Superior Court of Quebec, District of Montreal, No: 500-06-000 126-017
(the “Quebec A.P.E.I.Q. Action”) (collectively, the “Nortel I Canadian Actions”).
It is a condition to the Settlement (as defined herein) that the Nortel II U.S. Action and the
Norte] II Canadian Actions (collectively, the “Nortel II Actions”), as well as the Nortel I U.S.
Action and the Nortel I Canadian Actions (collectively, the “Nortel I Actions”) be settled
contemporaneously and that the Settlement and the settlement of the Norte? I Actions be
approved by all of the respective courts.
2
WHEREAS:
A. Beginning on March 17, 2004, several putative class actions on behalf of persons who
purchased Nortel common stock or call options on Nortel common stock or wrote (sold) put options on
Nortel common stock during the period between April 24, 2003 through April 27, 2004, inclusive,
were filed against Nortel and Frank Dunn, Douglas C. Beatty, Michael J. Gollogly, John Edward
Cleghorn, Robert Ellis Brown, Robert Alexander Ingram, Guylaine Saucier, and Sherwood Hubbard
Smith, Jr., (the “Individual Defendants”) alleging violations of Sections 10(b) and 20(a) of the
(United States) Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Rule 10b-5
promulgated thereunder, and subsequently consolidated by order of the United States District Court
for the Southern District of New York, entered June 30, 2004, under the caption In re Nortel
Networks Corp. Securities Litigation, Master File No. 04 Civ. 2115 (LAP);
B. On September 10, 2004, Lead Plaintiffs filed a Consolidated Class Action Complaint (the
“Complaint”), which alleged that Nortel, with the participation of the Individual Defendants,
perpetrated a fraud on the investing public by improperly accounting for Nortel’s reserve accounts,
reversing millions of dollars into income to make the market believe that Nortel had returned to
profitability, when, in fact, it had not. On November 5, 2004, certain Defendants moved to dismiss
the Complaint. On December 3, 2004, Lead Plaintiffs filed their memorandum of law opposing the
motions to dismiss. On December 23, 2004, certain Defendants filed their reply papers in further
support of the motions to dismiss. On January 19, 2005, Lead Plaintiffs and Defendants entered
into a stipulation whereby Defendants would withdraw their motions to dismiss, Lead Plaintiffs
would withdraw their previously-filed motion to lift the discovery stay implemented by the (United
States) Private Securities Litigation Reform
3
Act, Lead Plaintiffs would drop the Audit Committee Defendants (herein defined) from the
Complaint, and the parties would commence discovery;
C. Lead Plaintiffs filed their Second Amended Consolidated Class Action Complaint (the “Second
Amended Complaint”) on September 16, 2005. The Second Amended Complaint alleged that the members
of the Audit Committee of Nortel’s Board of Directors (the “Audit Committee Defendants”) violated
Section 10(b) of the Exchange Act and Rule 10b-5 promulgated thereunder by issuing materially false
and misleading statements during the Class Period in a scheme to artificially inflate the value of
Nortel publicly-traded securities. Specifically, Lead Plaintiffs alleged that the Audit Committee
Defendants disregarded the warning provided to them by Nortel’s auditors, Deloitte & Touche LLP
(“Deloitte”), that Nortel was reversing hundreds of millions of dollars of reserves into income at
the same time that Nortel’s projected losses turned into profits, and that the Audit Committee
Defendants ignored Deloitte’s recommendation that Nortel institute a rigorous review of Nortel’s
remaining balance sheet provisions, choosing instead to approve numerous financial disclosures
reporting positive earnings results and a premature restatement that deceived investors as to
Nortel’s true financial condition;
D. Pursuant to a stipulation entered into in January 2005 between Nortel and Lead Plaintiffs,
Nortel waived its right to move to dismiss the Second Amended Complaint. As a result of the
pending settlement negotiations, the parties agreed to extend the dates for defendants Dunn and
Gollogly to answer the First Amended Complaint, the dates for Nortel, Dunn and Gollogly to answer
the Second Amended Complaint and the date by which the Audit Committee Defendants had to move to
dismiss or answer the Second Amended Complaint;
4
E. Lead Plaintiffs filed their motion for class certification on May 13, 2005. As a result of
the pending settlement negotiations, the parties agreed to extend the dates for Defendants to
oppose the class certification motion. As part of this Settlement, the Defendants to the Nortel II
U.S. Action will stipulate to a class, as follows: all persons and entities who purchased Nortel
common stock or call options on Nortel common stock or wrote (sold) put options on Nortel common
stock (collectively, “Nortel Securities”) during the period between April 24, 2003 through April
27, 2004, inclusive (the “Class Period”), and who suffered damages thereby, including, but not
limited to, those persons or entities who traded in Nortel Securities on the New York Stock
Exchange and/or the Toronto Stock Exchange. The parties to the Nortel II U.S. Action will seek an
Order under Rule 23 of the Federal Rules of Civil Procedure certifying the class for settlement
purposes;
F. On March 9, 2005, the Ontario Gallardi Action was commenced in the Ontario Superior Court
of Justice against Nortel, the Individual Defendants and Deloitte through the issuance of a
Statement of Claim. The claim alleges that the defendants were liable for misrepresenting Nortel’s
true financial situation by creating improper cash reserves and issuing false reports and financial
statements that artificially inflated Nortel’s earnings and the price of Nortel securities during
the Class Period. It also alleges that Nortel’s top executives used these reserves to trigger
bonus payments that were payable in the event of Nortel’s return to profitability. The claim
further alleges that Nortel and certain of its officers breached corporate and securities
legislation, including the Canada Business Corporations Act, the Ontario Securities Act and the
Canadian Competition Act;
G. The plaintiff in the Ontario Gallardi Action filed with the Ontario Superior Court of
Justice and delivered to the defendants in November 2005 their motion for certification.
5
Counsel in the Ontario Gallardi Action have attended a number of case conferences before the
Honourable Justice Winkler as the proceeding moved towards a certification hearing;
H. On February 18, 2005, the Quebec Skarstedt Action was commenced in the Superior Court of
Quebec against Nortel through the issuance of a Motion for Authorization to Institute a Class
Action. The claim alleges that Nortel intentionally misrepresented its financial results for the
fiscal year 2003. At a preparatory conference held on May 19, 2005, the hearing of the Motion for
Authorization was scheduled for January 4 to 10, 2006. At that preparatory conference, Nortel
indicated its intention to file a Motion to Dismiss the Petitioner’s Motion for Authorization to
Institute a Class Action on the basis that the factual allegations lacked a substantial connection
to Quebec. A further preparatory conference was held on October 6, 2005, at which time Nortel
agreed to serve its Motion to Dismiss by November 11, 2005. It was also decided that the Motion to
Dismiss should be heard before the Motion for Authorization and thus, the hearing of the Motion for
Authorization was postponed. The hearing of the Motion to Dismiss was scheduled for April 10 and
11, 2006, but was adjourned following the announcement of the settlement agreement in principle in
February 2006;
I. Following the announcement of the settlement agreement in principle in February 2006 to
settle the Nortel II Actions and the Nortel I Actions as part of a global settlement, Lead
Plaintiffs Counsel and Nortel’s Counsel have worked with plaintiffs’ counsel in the Nortel I
Actions and the Nortel II Canadian Actions to coordinate the settlement process to obtain approvals
of the global settlement by the United States District Court for the Southern District of New York
and by the applicable Canadian courts, and plaintiffs’ counsel in the Nortel I Actions and Nortel
II Canadian Actions have been consulted and participated in the drafting of this Stipulation and
other settlement documents;
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J. Defendants in the Nortel II Actions deny any wrongdoing whatsoever, and this Stipulation
shall in no event be construed or deemed to be evidence of or an admission or concession on the
part of any defendant with respect to any claim of any fault or liability or wrongdoing or damage
whatsoever, or any infirmity in the defenses that the defendants have asserted;
K. The parties to this Stipulation recognize that the Nortel II U.S. Action has been filed by
the Lead Plaintiffs and defended by the Defendants in good faith, that the Nortel II U.S. Action is
being voluntarily settled after advice of counsel, and that the terms of the Settlement are fair,
reasonable and adequate. This Stipulation shall not be construed or deemed to be a concession by
Lead Plaintiffs or any Class Member of any infirmity in the claims asserted in the Nortel II U.S.
Action or any other action;
L. Lead Plaintiffs’ Counsel have conducted investigations relating to the claims and the
underlying events and transactions alleged in the Nortel II U.S. Action. Lead Plaintiffs’ Counsel
have analyzed the evidence adduced during pretrial discovery and have researched the applicable law
with respect to the claims of the Lead Plaintiffs and the U.S. Global Class against the Defendants
and the potential defenses thereto;
M. The parties recognize that the claims asserted in either of the Nortel II Actions or the
Nortel I Actions, if proved by the plaintiffs in those actions, could have exposed Nortel to
substantial damages awards. Accordingly, the parties considered that a resolution of the Nortel II
Actions and the Nortel I Actions was advisable from the point of view of all parties;
N. With the assistance of the Honorable Robert W. Sweet, United States District Court Judge,
acting as a special mediator, the Lead Plaintiffs in the Nortel II U.S. Action and the Lead
Plaintiff in the Nortel I U.S. Action, directly and by their counsel, have conducted
7
discussions and arm’s-length negotiations with Nortel’s Counsel with respect to a global
compromise and settlement of the Nortel I Actions and the Nortel II Actions and with a view to
settling the issues in dispute and achieving the best relief possible consistent with the interests
of the overall classes in the Nortel II Actions and the Nortel I Actions;
O. Nortel considers that, in order for it to achieve an end to litigation, it is a necessary
condition to the settlement of the Nortel II U.S. Actions that as part of the Settlement the
applicable Canadian Courts approve the Settlement with respect to the Nortel II Canadian Actions
and that the Settlement be similarly conditional on the approval of the separate settlement reached
with respect to the Nortel I Actions;
P. Based upon their investigation and pretrial discovery as set forth above, Lead Plaintiffs
and their counsel have concluded that the terms and conditions of this Stipulation are fair,
reasonable and adequate to Lead Plaintiffs and the U.S. Global Class, and are in their best
interests, and Lead Plaintiffs have agreed to settle the claims raised in the Nortel II U.S. Action
pursuant to the terms and provisions of this Stipulation, after considering (a) the substantial
benefits that the members of the U.S. Global Class will receive from settlement of the Nortel 11
U.S. Action, (b) the attendant risks of litigation, and (c) the desirability of permitting the
Settlement to be consummated as provided by the terms of this Stipulation; and
Q. Unless Nortel registers the Gross Settlement Shares (as defined herein), Nortel will issue
the Gross Settlement Shares in reliance on the exemption from registration under the (United
States) Securities Act of 1933, 15 U.S.C. §77c(a)(1), as amended, pursuant to Section 3(a)(l 0)
thereunder based on the Courts’ approval of the fairness of the terms and conditions of the
Settlement following a fairness hearing open to everyone to whom any Gross Settlement Shares would
be issued in the proposed Settlement, with adequate notice thereof having been
8
given to all those persons. In Canada, Nortel intends to issue the Gross Settlement Shares in
reliance upon the Exemptive Relief (as defined herein) granted by the applicable securities
regulatory authorities. However, if Nortel determines that such Exemptive Relief is unlikely to be
granted, Nortel would qualify the Gross Settlement Shares by a prospectus filed in each Canadian
province and territory.
NOW THEREFORE, without any admission or concession on the part of Lead Plaintiffs of any lack
of merit of the Nortel II U.S. Action whatsoever, and without any admission or concession of any
liability or wrongdoing or lack of merit in the defenses whatsoever by Defendants, it is hereby
STIPULATED AND AGREED, by and between the parties to this Stipulation, through their respective
counsel, subject to approval of the respective Courts pursuant to, as the case may be, Rule 23(e)
of the (United States) Federal Rules of Civil Procedure, Article 1025 of the Quebec Code of Civil
Procedure, Section 29 of the Ontario Class Proceedings Act, 1992 and Section 35 of the British
Columbia Class Proceedings Act, in consideration of the benefits flowing to the parties hereto from
the Settlement herein set forth, that all Settled Claims (as defined herein ), as against the
Released Parties (as defined herein ), and all Settled Defendants’ Claims (as defined herein) shall
be compromised, settled, released and dismissed with prejudice, upon and subject to the following
terms and conditions:
DEFINITIONS
1. As used in this Stipulation, the following terms shall have the following meanings:
(a) “Authorized Claimant” means a Class Member who submits a timely and valid Proof of Claim
form to the Claims Administrator.
(b) “B.C. Jeffery Action” means Jeffery et al. v. Nortel Networks Corporation et al., Supreme
Court of British Columbia, Vancouver Registry Court File No. S015159.
9
(c) “Canadian Class Counsel” means Ontario National Class Counsel and Quebec Class Counsel.
(d) “Canadian Classes” means the Ontario National Class and the Quebec Class.
(e) “Canadian Courts” means the Superior Court of Quebec and the Ontario Superior Court of
Justice.
(f) “Canadian Representative Plaintiffs” means Clifford W. Skarstedt and Peter Gallardi.
(g) “Cash Settlement Amounts” means the amounts specified in ¶ 4(a), (b) (c) and (e) hereof.
(h) “Claims Administrator” means The Garden City Group, Inc. (“GCG”), which shall administer
the Settlement.
(i) “Class” means all members of the U.S. Global Class and the Canadian Classes.
(j) “Class Distribution Order” has the meaning defined in ¶ 9 hereof.
(k) “Class Member” means a member of the Class.
(l) “Class Period” means, for the purposes of this Settlement only, the period of time between
April 24, 2003 through April 27, 2004, inclusive.
(m) “Court” means the United States District Court for the Southern District of New York.
(n) “Courts” means the United States District Court for the Southern District of New York, the
Ontario Superior Court of Justice, and the Superior Court of Quebec.
(o) “Defendants” means Nortel and the Individual Defendants.
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(p) “Derivative Application” means the application brought in Indiana Electrical Workers
Pension Trust Fund IBEW and Laborers Local 100 and 397 Pension Fund v. Nortel Networks Corporation,
Ontario Superior Court of Justice, Court File No. 49059 for leave pursuant to the Canada Business
Corporations Act to commence a representative action in the name of and on behalf of Nortel against
certain of the Released Parties.
(q) “Effective Date” means the date upon which the Settlement contemplated by this Stipulation
shall become effective, as set forth in ¶ 24 hereof.
(r) “Escrow Agent” means Bernstein Litowitz Berger & Grossmann LLP and any of its successors
as approved by the Courts, if necessary, such successors to be agreed upon by Plaintiffs’ Counsel
and the parties to the existing escrow agreements, acting as agent for the Class.
(s) “Exemptive Relief” has the meaning defined in ¶ 24(1)(1) hereof.
(t) “Final” or “Finality”, with respect to the Judgments (as defined herein), means: (a) if no
appeal is filed, the expiration date of the time provided for under the corresponding rules of the
applicable court or legislation for filing or noticing of any appeal from the Courts’ Judgments
approving the Settlement; or (b) if there is an appeal from the Judgments, the date of (i) final
dismissal of any appeal from the Judgments, or the final dismissal of any proceeding on certiorari
or otherwise to review the Judgments; or (ii) the date of final affirmance on an appeal of the
Judgments, the expiration of the time to file a petition for a writ of certiorari or other form of
review, or the denial of a writ of certiorari or other form of review of the Judgments, and, if
certiorari or other form of review is granted, the date of final affirmance of the Judgments
following review pursuant to that grant. Any proceeding or order, or any appeal or petition for a
writ of certiorari or other form of review pertaining solely to (i) any application for
11
attorneys’ fees, costs or expenses, and/or (ii) the plan of allocation, shall not in any way
delay or preclude the Judgments from becoming Final.
(u) “GCG” means The Garden City Group, Inc.
(v) “Gross Cash Settlement Fund” means the cash amounts paid or to be paid to the Escrow Agent
pursuant to ¶ 4(a), (b), (c) and (e) hereof, which consists of (i) Two Hundred Ninety Million, One
Hundred Sixty-Two Thousand, Four Hundred and Twenty-Eight United States Dollars and Forty-Eight
Cents (US$290,162,428.48), being the sum of Two Hundred Eighty-Seven Million, Five Hundred Thousand
United States Dollars (US$287,500,000) plus Two Million, Six Hundred Sixty-Two Thousand, Four
Hundred and Twenty-Eight United States Dollars and Forty-Eight Cents (US$2,662,428.48), paid to the
Escrow Agents by Nortel on June 1, 2006, plus (ii) Thirteen Million Five Hundred United States
Dollars (US$13,500,000) paid by Nortel’s insurers, plus (iii) Sixty Six Million, Four Hundred
Ninety-Five Thousand United States Dollars (US$66,495,000) and the interest thereon transferred to
the Escrow Agent by the Nortel I escrow agents for the benefit of the Nortel II Class (pursuant to
¶ 4(c) hereof), plus (iv) one-quarter of any actual recovery as a result of the action referenced
in T 4(e) hereof, plus (v) any interest on or other income or gains in respect of the amounts in
(i), (ii), (iii), (iv) and (v) earned while such amounts are held by the Escrow Agent.
(w) “Gross Settlement Fund” means the Gross Cash Settlement Fund plus the Gross Settlement
Shares.
(x) “Gross Settlement Shares” means 314,333,875 shares of common stock of Nortel to be issued
by Nortel, pursuant to the Settlement, as may be adjusted in accordance with ¶4(d) hereof.
12
(y) “Individual Defendants” means Frank Dunn, Douglas C. Beatty, Michael J. Gollogly, John
Edward Cleghorn, Robert Ellis Brown, Robert Alexander Ingram, Guylaine Saucier, and Sherwood
Hubbard Smith, Jr.
(z) “Judgment” or “Judgments” means any, some or all of the proposed judgments and orders to
be entered by the respective Courts approving the Settlement substantially in the forms attached
hereto as Exhibits B, D and E.
(aa) “Lead Plaintiffs” means Ontario Teachers’ Pension Plan Board and the Department of the
Treasury of the State of New Jersey and its Division of Investment.
(bb) “Lead Plaintiffs’ Counsel” means the law firm of Bernstein Litowitz Berger & Grossmann
LLP.
(cc) “Net Cash Settlement Fund” has the meaning defined in ¶ 5 hereof.
(dd) “Net Settlement Shares” has the meaning defined in ¶ 4(d) hereof.
(ee) “Net Settlement Fund” means the Net Cash Settlement Fund and the Net Settlement Shares.
(ff) “Nortel” means Nortel Networks Corporation.
(gg) “Nortel I Actions” means the Nortel I Canadian Actions and the Nortel I U.S. Action.
(hh) “Nortel I Canadian Actions” means the B.C. Jeffery Action, the Ontario Frohlinger Action
and the Quebec A.P.E.I.Q. Action.
(ii) “Nortel I Class” means all persons and entities who purchased Nortel common stock or call
options on Nortel common stock or wrote (sold) put options on Nortel common stock (collectively,
the “Nortel Securities”) during the period between October 24, 2000 through February 15, 2001,
inclusive, and, for purposes of the Nortel I U.S. Action, who suffered
13
damages thereby, including, but not limited to, those persons or entities who traded in Nortel
Securities on the New York Stock Exchange and/or the Toronto Stock Exchange. Excluded from the
Nortel I Class are the defendants Nortel, Clarence Chandran, Frank Dunn, John Roth, members of the
immediate families of any of the individual defendants, any entity in which any defendant has a
controlling interest or is a parent or subsidiary of or is controlled by Nortel, and the officers,
directors, affiliates, legal representatives, heirs, predecessors, successors or assigns of any of
the defendants. Excluded from the class in the Nortel I U.S. Action are any putative class members
who previously requested exclusion in response to the Notice of Pendency (as listed in the
Affidavit of Jack R. DiGiovanni dated July 2, 2004 and filed with the court in the Nortel I U.S.
Action), save if they are also members of any of the Nortel I Canadian classes and do not elect to
exclude themselves from such Nortel I Canadian classes (in which case they shall be eligible to
share in the proceeds of and will be bound by the terms of the settlement governing the Nortel I
Actions). Also excluded from the Nortel I Class are any putative members of the Nortel I Class who
exclude themselves by timely requesting exclusion in accordance with the requirements set forth in
the notice for the Nortel I Actions.
(jj) “Nortel I Notice” means Notice of Certification in Canada and Proposed Settlements of
Class Actions, Motions for Attorneys’ Fees and Settlement Fairness Hearings, which is to be sent to
members of the Nortel I Class.
(kk) “Nortel I U.S. Action” means In re Nortel Networks Corp. Securities Litigation,
Consolidated Civil Action No. 01-CV-1855 (RMB).
(ll) “Nortel II Actions” means the Nortel II Canadian Actions and the Nortel II U.S. Action.
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(mm) “Nortel II Canadian Actions” mean the Quebec Skarstedt Proceeding and the Ontario
Gallardi Action.
(nn) “Nortel II Defendants” means Nortel, the Individual Defendants and Deloitte & Touche LLP.
(oo) “Nortel II U.S. Action” means In re Nortel Networks Corp. Securities Litigation, Master
File No. 05-MD-1659 (LAP).
(pp) “Nortel common stock” or “common stock of Nortel” means common shares without nominal or
par value in the authorized capital of Nortel.
(qq) “Nortel Securities” means Nortel common stock or call options on Nortel common stock or
put options on Nortel common stock.
(rr) “Nortel’s Counsel” means the law firms of Shearman & Sterling LLP in the United States
and Lenczner Slaght Royce Smith Griffin LLP and Ogilvy Renault LLP in Canada.
(ss) “Notice” means the Notice of Pendency and Certifications of Class Actions and Proposed
Settlements, Motions for Attorneys’ Fees and Settlement Fairness Hearings, which is to be sent to
members of the Class substantially in the form attached hereto as Tab I to Exhibit A.
(tt) “Ontario Gallardi Action” means Gallardi v. Nortel Networks Corporation et al., Court
File No. 05-CV-285606CP (Ont. Sup.Ct. J.).
(uu) “Ontario Frohlinger Action” means Frohlinger v. Nortel Networks Corporation et al., Court
File No. 02-CL-4605 (Ont. Sup.Ct. J.).
(vv) “Ontario National Class” means the class to be certified, for the purposes of settlement
only, by the Ontario Superior Court of Justice in the Ontario Gallardi Action
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comprising all persons or entities, except members of the Quebec Class, who, while residing in
Canada at the time, purchased Nortel common stock or call options or wrote (sold) put options on
Nortel common stock during the period between April 24, 2003 through April 27, 2004, inclusive.
Excluded from the Ontario National Class are (i) the Defendants; (ii) James Kinney (Finance Chief
for Nortel’s Wireless Networks Division, Richardson, Texas), Ken Taylor (Vice President for
Nortel’s Enterprise Networks Division, Raleigh, North Carolina), Craig Johnson (Finance Director
for Nortel’s Wireline Networks Division, Richardson, Texas), Doug Hamilton (Finance Director for
Nortel’s Optical Networks Group, Montreal, Quebec), Michel Gasnier (Vice President of Finance for
Europe), Robert Ferguson (Vice President of Finance for China), and William Bowrey (Controller for
Asia); (iii) members of the immediate family of each of the Individual Defendants and/or any of the
individuals referenced above; (iv) any entity in which any Defendant and/or any of the individuals
referenced above has a controlling interest; (v) any parent, subsidiary or affiliate of Nortel;
(vi) any person who was an officer or director of Nortel or any of its subsidiaries or affiliates
during the Class Period; and (vii) the legal representatives, heirs, predecessors, successors or
assigns of any of the excluded persons or entities. Also excluded from the Ontario National Class
are any putative members of the Ontario National Class who exclude themselves by timely filing a
request for exclusion in accordance with the requirements set forth in the Notice.
(ww) “Ontario National Class Counsel” means Rochon Genova LLP and Lemers LLP.
(xx) “Opt-out Threshold” has the meaning set forth in ¶ 23 and in the Supplemental Agreement.
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(yy) “Order for Notice and Hearing” means the proposed order preliminarily approving the
Settlement and directing notice thereof to the Class substantially in the form attached hereto as
Exhibit A.
(zz) “Plaintiffs’ Counsel” means Plaintiffs’ Lead Counsel, Canadian Class Counsel, and any
other counsel representing Class Members.
(aaa) “Proof of Claim” means the form substantially in the form attached as Tab 2 to Exhibit A
hereto.
(bbb) “Publication Notice” means the summary notice of proposed Settlement and hearing for
publication substantially in the form attached as Tab 3 to Exhibit A.
(ccc) “Quebec A.P.E.I.Q. Action” means Association de Protection des Epargnants et
Investisseurs du Quebec v. Corporation Nortel Networks, Superior Court of Quebec, District of
Montreal, No: 500-06-000126-017.
(ddd) “Quebec Class” means the class to be authorized by the Superior Court of Quebec in the
Quebec Skarstedt Action, comprised of all persons and entities who, while residing in Quebec at the
time, purchased Nortel common stock or call options on Nortel common stock or wrote (sold) put
options on Nortel common stock during the period between April 24, 2003 through April 27, 2004,
inclusive. For purposes of the definition of Quebec Class, an entity means a legal person
established for a private interest, a partnership or an association if at all times during the
12-month period preceding February 18, 2005, not more than 50 persons bound to it by contract of
employment were under its direction or control and if it is dealing at arm’s length with the
representative of the Quebec Class. Excluded from the Quebec Class are (i) defendants in the
Nortel II Actions; (ii) James Kinney (Finance Chief for Nortel’s Wireless Networks Division,
Richardson, Texas), Ken Taylor (Vice President for
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Nortel’s Enterprise Networks Division, Raleigh, North Carolina), Craig Johnson (Finance
Director for Nortel’s Wireline Networks Division, Richardson, Texas), Doug Hamilton (Finance
Director for Nortel’s Optical Networks Group, Montreal, Quebec), Michel Gasnier (Vice President of
Finance for Europe), Robert Ferguson (Vice President of Finance for China), and William Bowrey
(Controller for Asia); (iii) members of the immediate family of each of the individual defendants
in the Nortel II Actions and/or any of the individuals referenced above; (iv) any entity in which
any defendant in the Nortel II Actions and/or any of the individuals referenced above has a
controlling interest; (v) any parent, subsidiary or affiliate of Nortel; (vi) any person who was an
officer or director of Nortel or any of its subsidiaries or affiliates during the Class Period; and
(vii) the legal representatives, heirs, predecessors, successors or assigns of any of the excluded
persons or entities. Also excluded from the Quebec Class are any putative members of the Quebec
Class who exclude themselves by timely filing a request for exclusion in accordance with the
requirements set forth in the Notice.
(eee) “Quebec Class Counsel” means Trudel & Johnston.
(fff) “Quebec Skarstedt Action” means Skarstedt v. Corporation Nortel Networks, Superior Court
of Quebec, No: 500-06-000277-059.
(ggg) “Released Parties” means any and all of the Nortel II Defendants, their past or present
subsidiaries, parents, principals, affiliates, general or limited partners or partnerships,
successors and predecessors, heirs, assigns, officers, directors, agents, employees, attorneys,
advisors, investment advisors, investment bankers, underwriters, insurers, co-insurers,
re-insurers, accountants, auditors, consultants, administrators, executors, trustees, personal
representatives, immediate family members and any person, firm, trust, partnership, corporation,
officer, director or other individual or entity in which any Nortel II Defendant has a controlling
18
interest or which is related to or affiliated with any of the Nortel II Defendants, and the
legal representatives, heirs, executors, administrators, trustees, successors in interest or
assigns of the Defendants.
(hhh) “Settled Claims” means any and all claims, debts, demands, rights or causes of action,
suits, matters, and issues or liabilities whatsoever (including, but not limited to, any claims for
damages, interest, attorneys’ fees, expert or consulting fees, and any other costs, expenses or
liability whatsoever), whether based on United States or Canadian federal, state, provincial,
local, statutory or common law or any other law, rule or regulation, whether fixed or contingent,
accrued or unaccrued, liquidated or unliquidated, at law or in equity, matured or unmatured,
whether class or individual in nature, including both known claims and Unknown Claims (as defined
herein), (i) that have been asserted in any of the Nortel II Actions against any of the Released
Parties, or (ii) that could have been asserted in any forum by the Class Members or any of them
against any of the Released Parties which arise out of or are based upon the allegations,
transactions, facts, matters or occurrences, representations or omissions involved, set forth, or
referred to in the Nortel II Actions and which relate to the purchase of Nortel common stock or
call options on Nortel common stock or the writing (sale) of put options on Nortel common stock
during the Class Period, or (iii) any oppression or other claims under the Canada Business
Corporations Act, R.S.C. 1985, c. C-44, as amended, that arise out of or are based upon the
allegations, transactions, facts, matters or occurrences, representations or omissions, set forth
or referred to in the Nortel II Actions. “Settled Claims” does not mean or include claims, if any,
against the Released Parties arising under the (United States) Employee Retirement Income Security
Act of 1974, as amended, 29 U.S.C. § 1001,
et seq. (“ERISA”) that are not common to all Class
Members and which ERISA claims are the subject of an action pending before the
19
Judicial Panel on Multidistrict Litigation, denominated In re Nortel Networks Securities and
“ERISA” Litigation, MDL Docket No. 1537. “Settled Claims” further does not include: (a) the action
in Rohac et al. v. Nortel Networks Corp. et al., Ontario Superior Court of Justice, Court File No.
04-CV-3268 and (b) the Derivative Application.
(iii) “Settled Defendants’ Claims” means any and all claims, rights or causes of action or
liabilities whatsoever, whether based on United States or Canadian federal, state, provincial,
local, statutory or common law or any other law, rule or regulation, including both known claims
and Unknown Claims, that have been or could have been asserted in the Nortel II Actions or any
forum by the Defendants or any of them or the successors and assigns of any of them against any of
the Lead Plaintiffs, Canadian Representative Plaintiffs, any Class Member or their attorneys, which
arise out of or relate in any way to the institution, prosecution, or settlement of the Nortel II
Actions (except Settled Defendants’ Claims does not include all claims, rights or causes of action
or liabilities whatsoever related to the enforcement of the Settlement, including, without
limitation, any of the terms of this Stipulation or orders or judgments issued by the Courts in
connection with the Settlement, confidentiality obligations or in respect of the Derivative
Application).
(jjj) “Settlement” means the global settlement of the Nortel II Actions contemplated by this
Stipulation.
(kkk) “Settlement Amount” means (i) Two Hundred Ninety Million, One Hundred Sixty-Two
Thousand, Four Hundred and Twenty-Eight United States Dollars and Forty-Eight Cents
(US$290,162,428.48) as set out in ¶ 4(a) hereof; (ii) Thirteen Million Five Hundred Thousand United
States Dollars (US$13,500,000) as set out in ¶ 4(b) hereof; (iii) Sixty-Six Million, Four Hundred
and Ninety-Five Thousand United States Dollars (US$66,495,000) as
20
set out in ¶ 4(c) hereof; (iv) the Gross Settlement Shares issued by Nortel as set out in ¶
4(d) hereof; and (v) one-quarter of any actual gross recovery by Nortel referenced in ¶ 4(e) hereof
as a result of the action referenced therein;
(lll) “Stipulation” means this Stipulation and Agreement of Settlement.
(mmm) ”Taxes” means (i) any and all applicable taxes, duties and similar charges imposed by a
government authority (including any estimated taxes, interest or penalties) arising in any
jurisdiction, if any (A) with respect to the income or gains earned by or in respect of the Gross
Cash Settlement Fund, including, without limitation, any taxes that may be imposed upon Nortel or
their counsel with respect to any income or gains earned by or in respect of the Gross Cash
Settlement Fund for any period while it is held by the Escrow Agent during which the Gross Cash
Settlement Fund does not qualify as a Qualified Settlement Fund for federal or state income tax
purposes; (B) with respect to the Gross Settlement Shares, if issued to the Escrow Agents, prior to
their distribution to the Authorized Claimants or Lead Plaintiffs’ Counsel; or (C) by way of
withholding as required by applicable law on any distribution by the Escrow Agent or the Claims
Administrator of any portion of the Gross Settlement Fund to Authorized Claimants and other persons
entitled hereto pursuant to this Stipulation; and (ii) any and all expenses, liabilities and costs
incurred in connection with the taxation of the Gross Settlement Fund (including without
limitation, expenses of tax attorneys and accountants). For the purposes of paragraph (A) hereof,
taxes imposed on Nortel shall include amounts equivalent to taxes that would be payable by Nortel
but for the existence of relief from taxes by virtue of loss carryforwards or other tax attributes,
determined by Nortel, acting reasonably, and accepted by the Escrow Agent, acting reasonably.
21
(nnn) “Unknown Claims” means any and all Settled Claims which any of the Lead Plaintiffs,
Canadian Representative Plaintiffs or Class Members does not know or suspect to exist in his, her
or its favor at the time of the release of the Released Parties and any Settled Defendants’ Claims
which any Nortel II Defendant does not know or suspect to exist in his, her or its favor, as of the
Effective Date, which if known by him, her or it might have affected his, her or its decision(s)
with respect to the Settlement. With respect to any and all Settled Claims and Settled Defendants’
Claims, the parties stipulate and agree that upon the Effective Date, the Lead Plaintiffs, Canadian
Representative Plaintiffs and the Defendants shall expressly waive, and each Class Member shall be
deemed to have waived, and by operation of the Judgments shall have expressly waived, any and all
provisions, rights and benefits conferred by any law of any state, province or territory of the
United States or Canada, or principle of common law or otherwise, which is similar, comparable, or
equivalent to Cal. Civ. Code § 1542, which provides:
A general release does not extend to claims which the creditor does
not know or suspect to exist in his favor at the time of executing
the release, which if known by him must have materially affected his
settlement with the debtor.
Lead Plaintiffs, Canadian Representative Plaintiffs and Nortel acknowledge, and Class Members by
operation of law shall be deemed to have acknowledged, that the inclusion of “Unknown Claims” in
the definition of Settled Claims and Settled Defendants’ Claims was separately bargained for and
was a key element of the Settlement.
(ooo) “U.S. Global Class” means, for the purposes of this settlement only, all persons and
entities who purchased Nortel common stock or call options on Nortel common stock or wrote (sold)
put options on Nortel common stock during the period between April 24, 2003 through April 27, 2004,
inclusive, and who suffered damages thereby. Members of the Canadian Classes who suffered damages
are included within the definition of U.S. Global Class,
22
unless otherwise excluded by this definition. Excluded from the U.S. Global Class are (i) the
Defendants; (ii) James Kinney (Finance Chief for Nortel’s Wireless Networks Division, Richardson,
Texas), Ken Taylor (Vice President for Nortel’s Enterprise Networks Division, Raleigh, North
Carolina), Craig Johnson (Finance Director for Nortel’s Wireline Networks Division, Richardson,
Texas), Doug Hamilton (Finance Director for Nortel’s Optical Networks Group, Montreal, Quebec),
Michel Gasnier (Vice President of Finance for Europe), Robert Ferguson (Vice President of Finance
for China), and William Bowrey (Controller for Asia); (iii) members of the immediate family of each
of the Individual Defendants; (iv) any entity in which any Defendant and/or any of the individuals
referenced above has a controlling interest; (v) any parent, subsidiary or affiliate of Nortel;
(vi) any person who was an officer or director of Nortel or any of its subsidiaries or affiliates
during the Class Period; and (vii) the legal representatives, heirs, predecessors, successors or
assigns of any of the excluded persons or entities. Also excluded from the U.S. Global Class are
any putative members of the U.S. Global Class who exclude themselves by timely requesting exclusion
in accordance with the requirements set forth in the Notice.
23
SCOPE AND EFFECT OF SETTLEMENT
2. The obligations incurred pursuant to this Stipulation shall be in full and final
disposition of the Nortel II U.S. Action as part of the Settlement and any and all Settled Claims
as against all Released Parties and any and all Settled Defendants’ Claims.
3. (a) Upon the Effective Date of the Settlement, Lead Plaintiffs, Canadian Representative
Plaintiffs (as confirmed in separate agreements) and all Class Members on behalf of themselves,
their personal representatives, heirs, executors, administrators, trustees, successors and assigns,
with respect to each and every Settled Claim, release and forever discharge, and are forever
enjoined from prosecuting, any Settled Claims against any of the Released Parties, and shall not
institute, continue, maintain or assert, either directly or indirectly, whether in the United
States, Canada or elsewhere, on their own behalf or on behalf of any class or any other person, any
action, suit, cause of action, claim or demand against any Released Party or any other person who
may claim any form of contribution or indemnity (save for a contractual indemnity) from any
Released Party in respect of any Settled Claim or any matter related thereto, at any time on or
after the Effective Date.
(b) Upon the Effective Date of this Settlement, defendants Nortel, John Edward Cleghorn,
Robert Ellis Brown, Robert Alexander Ingram, Guylaine Saucier, and Sherwood Hubbard Smith, Jr., on
behalf of themselves, their personal representatives, heirs, executors, administrators, trustees,
successors and assigns, release and forever discharge each and every one of the Settled Defendants’
Claims, and are forever enjoined from prosecuting the Settled Defendants’ Claims against Lead
Plaintiff, all Class Members and their respective counsel.
(c) Notwithstanding the provisions of ¶ 3(a) hereof, in the event that any of the Released
Parties asserts against the Lead Plaintiff, any Class Member or their respective
24
counsel, any claim that is a Settled Defendants’ Claim, then Lead Plaintiff, such Class Member
or counsel shall be entitled to use and assert such factual matters included within the Settled
Claims only against such Released Party in defense of such claim but not for the purposes of
asserting any claim against any Released Party.
SETTLEMENT CONSIDERATION
4. In consideration for the release and discharge provided for in ¶ 3(a) hereof, Nortel shall
(i) pay or cause to be paid the Settlement Amount, as prescribed in ¶ 4(a) – (e), hereof; and (ii)
adopt the corporate governance enhancements as prescribed in ¶ 4(f) hereof.
(a) On June 1, 2006, Nortel paid to the Escrow Agent as agent for the benefit of the Class:
Two Hundred Ninety Million, One Hundred Sixty-Two Thousand, Four Hundred and Twenty-Eight United
States Dollars and Forty-Eight Cents (U.S.$290,162,428.48) being an amount computed as the sum of
(i) Two Hundred Eighty-Seven Million, Five Hundred Thousand United States Dollars
(U.S.$287,500,000), and (ii) Two Million, Six Hundred Sixty-Two Thousand, Four Hundred and
Twenty-Eight United States Dollars and Forty-Eight Cents (US$2,662,428.48), which is an amount
equal to the interest that would have been earned on the amount in (i) above from March 23, 2006 if
invested at the compounded rate for 90-day United States Treasury securities.
(b) Nortel’s insurance carriers have paid to the Escrow Agent as agent for the benefit of the
Class Thirteen Million Five Hundred Thousand United States Dollars (U.S.$13,500,000) (the
“Insurers’ Nortel II Cash Settlement Amount”).
(c) Pursuant to an allocation agreement between the Lead Plaintiffs in the Nortel II U.S.
Action and the lead plaintiff in the Nortel I U.S. Action, the escrow agents in the Nortel I Action
transferred Sixty-Six Million, Four Hundred Ninety-Five Thousand United States Dollars
(US$66,495,000), plus interest thereon from April 3, 2006 to the date of the transfer at
25
the same interest rate earned on the gross cash settlement fund in the Nortel I Actions, from
the gross cash settlement fund in the Nortel I Actions to the Escrow Agent.
(d) In addition, in payment of that part of the Settlement Amount described in part (iv) of
the definition thereof, and at a time or times subsequent to the Effective Date, Nortel will,
following receipt of the written instructions referred to below (which written instructions shall
be deliverable only after the Effective Date), as promptly as possible using every commercially
reasonable effort, issue and deliver the Gross Settlement Shares in whole or in part and from time
to time (any such shares referred to herein as “Settlement Shares”) as instructed in writing by
Lead Plaintiffs’ Counsel, on notice to and in consultation with Canadian Class Counsel, which
instructions, as relate to Authorized Claimants, shall include proportionate distributions to all
Authorized Claimants based on the determinations made by the Claims Administrator and approved by
the Class Distribution Order. Upon receipt of such instructions, Nortel will cause its transfer
agent to issue certificates evidencing such Settlement Shares registered in the respective names of
the Authorized Claimants (or, if acceptable to Nortel, through “book-entry” registration of such
Settlement Shares) and, to the extent applicable, Plaintiffs’ Counsel (as awarded in accordance
with ¶ 8 hereof) and in such amounts as set forth in such instructions, and deliver such
certificates and/or notices to such Authorized Claimants and Plaintiffs’ Counsel, as applicable.
The reasonable costs and expenses of such physical delivery and extraordinary or expedited
services, if any, of the transfer agent shall be paid out of the Gross Cash Settlement Fund. The
Gross Settlement Shares issued and delivered by Nortel pursuant to this Settlement shall be freely
tradeable upon receipt by the Authorized Claimants and Plaintiffs’ Counsel, subject to (i) under
U.S. securities laws, (A) the approvals required under U.S. state securities or “blue sky” laws
referred to in ¶ 24(i)(4) hereof and (B) such
26
limitations on resale as may be applicable with respect to Authorized Claimants who are
“affiliates” of Nortel within the meaning of such securities laws, and (ii) such limitations on
resale as may be applicable under Canadian securities laws or as contemplated by the Exemptive
Relief. At the time of issuance and delivery, the Gross Settlement Shares shall be listed for
trading on the New York Stock Exchange and the Toronto Stock Exchange, subject to official notice
of issuance. Nortel shall at no cost to the Class either register the Gross Settlement Shares or
confirm that it has received the written opinion of counsel, substantially to the effect that the
issuance and delivery to the Authorized Claimants and Plaintiffs’ Counsel of the Gross Settlement
Shares are exempt from registration under the (United States) Securities Act of 1933, 15 U.S.C. §
77c(a)(1), as amended, pursuant to Section 3(a)(10) thereunder. Nortel shall also, at no cost to
the Class, either qualify the Gross Settlement Shares pursuant to a prospectus filed under all
applicable Canadian provincial and territorial securities legislation or confirm that it has
received the written opinion of Canadian counsel substantially to the effect that the issuance and
delivery to the Authorized Claimants and Plaintiffs’ Counsel of the Gross Settlement Shares in
Canada are exempt from the dealer registration and prospectus requirements of all applicable
Canadian provincial and territorial securities legislation and that the first trade in any such
province or territory of Gross Settlement Shares shall not be subject to the prospectus
requirements of the securities legislation of such province or territory provided that the
conditions on resale set forth in the Exemptive Relief are satisfied. Nortel understands that such
written opinions may be relied upon by Nortel’s transfer agent. From the date hereof until the
date or dates Nortel issues the Gross Settlement Shares upon Lead Plaintiff’s Counsel’s written
instructions as aforesaid, the Gross Settlement Shares shall be appropriately adjusted to account
for any stock splits, stock consolidations, stock dividends, return of capital, extraordinary
27
distributions, recapitalization or sale of all or substantially all of Nortel’s assets or, by
Nortel using every commercially reasonable effort to cause a counterparty to agree to the
adjustment contemplated by this If 4(d), any conversion or exchange of Nortel’s outstanding shares
of common stock into other shares, securities or property resulting from an amalgamation or merger.
The Gross Settlement Shares, less any Settlement Shares awarded to Plaintiffs’ Counsel pursuant to
¶ 8 hereof (the “Net Settlement Shares”), shall be distributed to Authorized Claimants.
(e) In addition to the payment of those parts of the Settlement Amounts described in ¶ 4(a),
(b), (c) and (d) above, Nortel will also contribute to the Gross Cash Settlement Fund by payment to
the Escrow Agent, one-quarter of the amount of any actual gross recovery (including the value of
any monetary benefit that Nortel might receive from the defendants by way of forgiveness or
cancellation of any monetary debt owed by Nortel to such defendants), excluding court-awarded
attorneys’ fees and expenses, if any, in the existing action commenced by Nortel against Frank
Dunn, Douglas Beatty and Michael Gollogly in the Ontario Superior Court of Justice bearing Court
File No. 05-CV-283095PD1.
(f) Within sixty (60) days after the Effective Date, Nortel shall adopt the corporate
governance enhancements described in Appendix A of the Notice.
5. (a) The Gross Cash Settlement Fund shall be used to pay (i) the Notice and Publication
Notice and administration costs referred to in ¶ 7 hereof, (ii) the attorneys’ fee and expense
award referred to in ¶ 8 hereof, and (iii) the remaining administration expenses referred to in ¶ 9
hereof. The balance of the Gross Cash Settlement Fund after the above payments and payment of any
Taxes (as defined herein) shall be the Net Cash Settlement Fund. The Net Cash Settlement Fund
shall be transferred following the Effective Date by the Escrow Agent to the
28
Claims Administrator for distribution to Authorized Claimants as provided in ¶¶ 10-12 hereof.
Any sums required to be held in escrow hereunder shall be held by the Escrow Agent as agent for the
Class. All funds held by the Escrow Agent shall be deemed to be in the custody of the Courts until
such time as the funds shall be distributed to Authorized Claimants or paid to the persons paying
the same pursuant to this Stipulation and/or further order of the Courts. The Escrow Agent shall
invest any funds in excess of U.S.$100,000 in short term United States Agency or Treasury
Securities (or a mutual fund invested solely in such instruments), and shall collect and reinvest
all interest accrued thereon. Any funds held in escrow in an amount of less than U.S.$100,000 may
be held in a bank account insured by the Federal Deposit Insurance Corporation (“FDIC”). The
parties hereto agree that the Gross Cash Settlement Fund is intended to be a Qualified Settlement
Fund within the meaning of Treasury Regulation § 1.468B-1, and that the Escrow Agent as
administrator of the Gross Cash Settlement Fund within the meaning of Treasury Regulation §
I.468B-2(k)(3), shall be responsible for filing tax returns and any other tax reporting for or in
respect of the Gross Settlement Fund and paying from the Gross Cash Settlement Fund any Taxes owed
with respect to the Gross Settlement Fund. The parties hereto agree that the Gross Cash Settlement
Fund shall be treated as a Qualified Settlement Fund from the earliest date possible, and agree to
any relation-back election required to treat the Gross Cash Settlement Fund as a Qualified
Settlement Fund from the earliest date possible. Nortel agrees to provide promptly to the Escrow
Agent the statement described in Treasury Regulation § I.468B-3(e).
(b) All Taxes (as defined herein) shall be paid out of the Gross Cash Settlement Fund, shall
be considered to be a cost of administration of the Settlement and shall be timely paid by the
Escrow Agent without prior Order of the Courts. The Gross Settlement Fund
29
or the Escrow Agent shall, to the extent required by law, be obligated to withhold from any
distributions to Authorized Claimants and other persons entitled thereto pursuant to this
Stipulation any funds necessary to pay Taxes including the establishment of adequate reserves for
Taxes as well as any amount that may be required to be withheld under Treasury Reg. 1.468B-(1)(2)
or otherwise under applicable law in respect of such distributions. Further, the Gross Settlement
Fund shall indemnify and hold harmless the Nortel II Defendants and their counsel for Taxes
(including, without limitation, taxes payable by reason of any such indemnification payments).
(c) Furthermore, to the extent (without prejudice or admission of any kind) that the Funds
d’aide aux recours collectifs (Class Action Assistance Fund (the “Fund”)) of Quebec is entitled
under Quebec law to any portion of the Gross Cash Settlement Fund and/or the Gross Settlement
Shares regarding claims by Quebec residents with respect to either of these compensatory items, any
relevant payments (whether in cash or shares) will be set aside by the Claims Administrator on
behalf of and paid over to the Fund from the amounts otherwise allocable to such Quebec residents,
it being agreed and understood that none of the Nortel II Defendants or the Released Parties shall
bear any responsibility for any such payment of cash or shares.
(d) None of the Nortel II Defendants, the Released Parties or their respective counsel shall
have any responsibility for or liability whatsoever with respect to (i) any act, omission or
determination of Lead Plaintiffs’ Counsel, the Escrow Agent or the Claims Administrator, or any of
their respective designees or agents, in connection with the administration of the Settlement or
otherwise; (ii) the management, investment or distribution of the Gross Cash Settlement Fund; (iii)
the Plan of Allocation; (iv) the determination,
30
administration, calculation or payment of any claims asserted against the Gross Settlement
Fund; (v) any losses suffered by, or fluctuations in the value of, the Gross Settlement Fund; or
(vi) the payment or withholding of any Taxes, expenses and/or costs incurred in connection with the
taxation of the Gross Settlement Fund or the filing of any returns.
(e) Authorized Claimants shall provide any and all such information that the Claims
Administrator may reasonably require and is required by applicable law in respect of Taxes and
filings and reportings for and in respect of Taxes, before any distributions are made to Authorized
Claimants as contemplated hereby and the Claims Administrator may, without liability to the
Authorized Claimants, delay such distributions unless and until such information is provided in the
form required by the Claims Administrator.
ADMINISTRATION
6. The Claims Administrator shall administer the Settlement subject to the concurrent
jurisdictions of the Courts for all members of the Canadian Classes and for all other Class Members
subject solely to the jurisdiction of the Court. To the extent reasonably necessary to effectuate
the terms of the Settlement, Nortel shall provide to the Claims Administrator, without charge, all
information from Nortel’s transfer records concerning the identity of Class Members and their
transactions.
7. (a) The Escrow Agent, acting solely in its capacity as escrow agent, shall be subject to
the jurisdiction of the Courts.
(b) The Escrow Agent may pay from the Gross Cash Settlement Fund, without further approval
from Nortel, all reasonable costs and expenses associated with identifying and notifying the Class
Members and effecting mailing of the Notice and Proof of Claim and publication of the Publication
Notice to the Class, and the administration of the Settlement, including without limitation, the
actual costs of printing and mailing the Notice and
31
Proof of Claim, publication of the Publication Notice, reimbursements to nominee owners for
forwarding the Notice and Proof of Claim to their beneficial owners, and the administrative
expenses incurred and fees charged by the Claims Administrator in connection with providing notice
and processing the submitted claims. In the event that the Settlement is terminated, as provided
for herein, notice and administration costs paid or accrued in connection with this paragraph shall
not be returned to the persons who paid the Cash Settlement Amounts.
(c) The Escrow Agent may rely upon any notice, certificate, instrument, request, paper or
other document reasonably believed by it to be genuine and to have been made, sent or signed by an
authorized signatory in accordance with this Stipulation, and shall not be liable for (and will be
indemnified from the Gross Cash Settlement Fund and held harmless from and against) any and all
claims, actions, damages, costs (including reasonable attorneys’ fees) and expenses claimed against
or incurred by the Escrow Agent for any action taken or omitted by it, consistent with the terms
hereof and the terms of separate escrow agreements between Nortel and the insurers and the Escrow
Agent, in connection with the performance by it of its duties pursuant to the provisions of this
Stipulation or order of the Courts, except for its gross negligence or willful misconduct. If the
Escrow Agent is uncertain as to its duties hereunder, the Escrow Agent may (i) request that Lead
Plaintiffs and Canadian Representative Plaintiffs (and, prior to the Effective Date, Nortel) sign a
document which states the action or non-action to be taken by the Escrow Agent or (ii) commence an
Interpleader action in a federal court in the Southern District of New York and be reimbursed out
of the monies held in the Gross Cash Settlement Fund for its costs and expenses (including
reasonable attorneys’ fees). In the event the Settlement is terminated, as provided for herein,
indemnified amounts and expenses incurred by the Escrow Agent in connection with this paragraph shall not be returned to the persons who paid the Settlement Amounts.
32
ATTORNEYS’ FEES AND EXPENSES
8. Lead Plaintiffs’ Counsel will apply to the United States District Court for the Southern
District of New York for an award of attorneys’ fees and reimbursement of expenses payable from
both the Gross Cash Settlement Fund and Gross Settlement Shares. Canadian Class Counsel will apply
to their corresponding Canadian Courts for an award of their counsel fees and reimbursement of
expenses to be paid from the Gross Cash Settlement Fund and Gross Settlement Shares. All
Plaintiffs’ Counsel shall further provide to their respective Courts, as part of the motion for
approval of the Settlement, all necessary information required by their respective courts
concerning the total award of attorneys’ fees and reimbursement of expenses to be payable from the
Gross Cash Settlement Fund and Gross Settlement Shares. The total amount of shares awarded as
attorneys’ fees and reimbursement of expenses may amount to no more than one-third of the Gross
Settlement Shares, and in fact shall be substantially less. Such amounts as are awarded by the
United States District Court for the Southern District of New York to Lead Plaintiffs’ Counsel or
from the Canadian Courts to Canadian Class Counsel from the Gross Cash Settlement Fund shall be
payable by the Escrow Agent immediately upon award, notwithstanding the existence of any timely
filed objections thereto, or potential for appeal therefrom, or collateral attack on the Settlement
or any part thereof, subject to Plaintiffs’ Counsel’s obligations to make appropriate refunds or
repayments to the Gross Cash Settlement Fund plus accrued interest at the same rate as is earned by
the Gross Cash Settlement Fund, if and when, as a result of any appeal and/or further proceedings
on remand, or successful collateral attack, the fee or cost award is reduced or reversed. Such
amounts as are awarded to Plaintiffs’ Counsel by the Courts from the Gross Settlement Shares shall
be payable to Plaintiffs’ Counsel at the first date on which the Effective Date has occurred and the award of attorneys’
fees is Final.
33
CLASS DISTRIBUTION ORDER/ADMINISTRATION EXPENSES
9. Lead Plaintiffs’ Counsel and Canadian Class Counsel will apply respectively to the United
States District Court for the Southern District of New York, and with respect to the claims of
Canadian Class Members to the Canadian Courts, on notice to Nortel’s Counsel, for an order (the
“Class Distribution Order”) approving the Claims Administrator’s administrative determinations
concerning the acceptance and rejection of the claims submitted herein, and approving any fees and
expenses not previously applied for relating to the administration of the Settlement, including the
fees and expenses of the Claims Administrator, the reasonable costs and expenses of the physical
delivery of the Gross Settlement Shares and any extraordinary or expedited services of the transfer
agent with respect to such physical delivery, and, only if the Effective Date has occurred,
directing payment of the Net Settlement Fund to Authorized Claimants.
34
DISTRIBUTION TO AUTHORIZED CLAIMANTS
10. The Claims Administrator shall determine each Authorized Claimant’s pro rata share of the
Net Settlement Fund based upon each Authorized Claimant’s Recognized Claim (as defined in the Plan
of Allocation described in the Notice annexed hereto as Tab 1 to Exhibit A).
11. It is understood and agreed by the parties that the proposed Plan of Allocation,
including, but not limited to, any adjustments to any Authorized Claimant’s claim set forth herein,
is not part of the Stipulation and is to be considered by the Courts separately from the Courts’
consideration of fairness, reasonableness and adequacy of the Settlement, and any order or
proceeding relating to the Plan of Allocation shall not operate to terminate or cancel the
Stipulation or affect the Finality of the Courts’ Judgments approving the Stipulation and the
Settlement set forth herein, or any other orders entered pursuant to the Stipulation.
12. Each Authorized Claimant shall be allocated a pro rata share of the Net
Settlement Fund based on his, her or its recognized claim compared to the total recognized claims
of all Authorized Claimants. This is not a claims-made settlement. Neither Nortel nor its
insurers shall be entitled to receive any of the Gross Settlement Fund following the Effective
Date. The Defendants shall have no involvement in reviewing or challenging claims.
ADMINISTRATION OF THE SETTLEMENT
13. Any Class Member who does not submit a valid Proof of Claim will not be entitled to
receive any of the proceeds from the Net Settlement Fund but will otherwise be bound by all of the
terms of this Stipulation and the Settlement, including the terms of the Judgments to be entered in
the Actions and the releases provided for herein, and will be barred from bringing any action
against the Released Parties concerning the Settled Claims.
14. The Claims Administrator shall process the Proofs of Claim and, after the Effective Date
and entry of the Class Distribution Order, Lead Plaintiffs’ Counsel in conjunction
35
with Canadian Class Counsel shall give to Nortel the written instructions to issue and deliver
the Gross Settlement Shares in accordance with ¶ 4(d) hereof and the Claims Administrator shall
distribute the Net Cash Settlement Fund to Authorized Claimants, and Nortel shall cause the
transfer agent to distribute the Net Settlement Shares to Authorized Claimants. Except for
Nortel’s obligation to pay or cause to be paid the Cash Settlement Amounts to the Escrow Agent in
accordance with ¶ 4 (a), (b) and (e) hereof, and to cooperate in the production of information with
respect to the identification of Class Members from Nortel’s shareholder transfer records, as
provided herein, and to issue and deliver the Gross Settlement Shares in accordance with If 4(d)
hereof, Defendants shall have no liability, obligation or responsibility for the administration of
the Settlement or disbursement of the Net Settlement Fund. Lead Plaintiff’s Counsel or Canadian
Class Counsel, as the case may be, shall have the right, but not the obligation, to advise the
Claims Administrator to waive what Lead Plaintiff’s Counsel, or, with respect to claims of the
Canadian Class Members, Canadian Class Counsel, deem to be formal or technical defects in any
Proofs of Claim submitted in the interests of achieving substantial justice.
15. For purposes of determining the extent, if any, to which a Class Member shall be entitled
to be treated as an Authorized Claimant, the following conditions shall apply:
(a) Each Class Member shall be required to submit a Proof of Claim (see attached Tab 2 to
Exhibit A), supported by such documents as are designated therein, including proof of the
transactions claimed and the losses incurred thereon or such other documents or proof as the Claims
Administrator, in its discretion, may deem acceptable;
(b) All Proofs of Claim must be submitted by the date specified in the Notice unless such
period is extended by Order of the United States District Court for the Southern District of New
York or, in the case of a member of Canadian Class, the applicable Canadian
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Court that certified the Canadian Class. Any Class Member who fails to submit a Proof of
Claim by such date shall be forever barred from receiving any payment pursuant to the Settlement
(unless, by court Order, a later submitted Proof of Claim by such Class Member is approved), but
shall in all other respects be bound by all of the terms of this Stipulation and the Settlement,
including the terms of the Judgments to be entered in the Norte] II Actions, and the releases
provided for herein, and will be barred from bringing any action against the Released Parties
concerning the Settled Claims. Provided that it is received before the first motion for the Class
Distribution Order is filed, a Proof of Claim shall be deemed to have been submitted when posted,
if received with a postmark indicated on the envelope and if mailed by first-class mail and
addressed in accordance with the instructions thereon. In all other cases, the Proof of Claim
shall be deemed to have been submitted when actually received by the Claims Administrator;
(c) Each Proof of Claim shall be submitted to and reviewed by the Claims Administrator, which
shall determine in accordance with this Stipulation and the approved Plan of Allocation the extent,
if any, to which each claim shall be allowed, subject to review by the Courts pursuant to
subparagraph (e) below;
(d) Proofs of Claim that do not meet the submission requirements may be rejected. Prior to
rejection of a Proof of Claim, the Claims Administrator shall communicate with the claimant in
order to attempt to remedy the curable deficiencies in the Proof of Claim submitted. The Claims
Administrator shall notify, in a timely fashion and in writing, each claimant whose Proof of Claim
they propose to reject in whole or in part, setting forth the reasons therefor, and shall indicate
in such notice that the claimant whose claim is to be rejected has the right to a review by the
United States District Court for the Southern District of New York or, in the case of a member of a
Canadian Class the applicable Canadian Court that
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certified the Canadian Class if the claimant so desires and complies with the requirements of
subparagraph (e) below; and
(e) If any claimant whose claim has been rejected in whole or in part desires to contest such
rejection, the claimant must, within twenty (20) days after the date of mailing of the notice
required in subparagraph (d) above, serve upon the Claims Administrator a notice and statement of
reasons indicating the claimant’s grounds for contesting the rejection along with any supporting
documentation, and requesting a final review thereof by the United States District Court for the
Southern District of New York or, in the case of a member of a Canadian Class the applicable
Canadian Court that certified the Canadian Class. If a dispute concerning a claim cannot be
otherwise resolved, Lead Plaintiffs’ Counsel or Canadian Class Counsel shall thereafter present the
request for review to the respective court or to such court’s designee.
16. The administrative determinations of the Claims Administrator accepting and rejecting
claims shall be presented to the United States District Court for the Southern District of New
York, and with respect to the claims of Canadian Class Members to the Canadian Courts, on notice to
Nortel’s Counsel, for approval in the Class Distribution Order.
17. Each claimant shall be deemed to have submitted to the jurisdiction of the United States
District Court for the Southern District of New York and, in the case of members of the Canadian
Classes with respect to such claimant’s claim the Canadian Court that certified the applicable
Canadian Class, and the claim will be subject to investigation and discovery under the (United
States) Federal Rules of Civil Procedure, or under applicable Canadian rules with respect to
members of the Canadian Classes, provided that such investigation and discovery shall be limited to
that claimant’s status as a Class Member and the validity and amount of such
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claimant’s claim. No discovery shall be allowed on the merits of the Nortel II Actions or the
Settlement in connection with processing of the Proofs of Claim.
18. Payment pursuant to the Settlement shall be deemed final and conclusive against all Class
Members. All Class Members whose claims are not approved pursuant to the Class Distribution Order
shall be barred from participating in distributions from the Net Settlement Fund, but otherwise
shall be bound by all of the terms of this Stipulation and the Settlement, including the terms of
the Judgments to be entered in the Nortel II Actions, and the releases provided for herein, and
will be barred from bringing any action against the Released Parties concerning the Settled Claims.
19. All proceedings with respect to the administration, processing and determination of claims
described by ¶15 hereof, and the determination of all controversies relating thereto, including
disputed questions of law and fact with respect to the validity of claims, shall be subject to the
jurisdiction of the United States District Court for the Southern District of New York or, in the
case of a Canadian Class Member, the jurisdiction of the applicable Canadian Court that certified
the Canadian Class.
20. The Net Cash Settlement Fund shall be distributed to Authorized Claimants by the Claims
Administrator, and the Net Settlement Shares shall be issued and distributed to Authorized
Claimants in accordance with ¶ 4(d) hereof, only after the Effective Date and after all Claims have
been processed, and all claimants whose Claims have been rejected or disallowed, in whole or in
part, have been notified and provided the opportunity to contest with the Claims Administrator such
rejection or disallowance.
TERMS OF ORDER FOR NOTICE AND HEARING
21. (a) Promptly after this Stipulation has been fully executed, Lead Plaintiffs Counsel and
Nortel’s Counsel jointly shall apply to the United States District Court for the
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Southern District of New York for entry of an Order for Notice and Hearing, substantially in
the form annexed hereto as Exhibit A.
(b) Promptly after this Stipulation has been fully executed, the Canadian Representative
Plaintiffs shall apply to the respective Canadian Courts for, and Nortel shall consent to, orders
for certification of the Nortel II Canadian Actions (for settlement purposes only and on terms
acceptable to Nortel) substantially in the form annexed hereto as Exhibits D — F and for directions
approving the Notice.
(c) The mailing or publication of the Notice and Publication Notice shall not occur until all
such orders of the Courts have been obtained, and in the event that any of the Courts require
changes in the Notice or the Publication Notice, after such changes are also approved by the other
Courts.
TERMS OF ORDER AND FINAL JUDGMENT
22. (a) If the Settlement contemplated by this Stipulation is approved by the United States
District Court for the Southern District of New York, Plaintiffs’ Lead Counsel and Nortel’s Counsel
shall request that a Judgment be entered substantially in the form annexed hereto as Exhibit B.
(b) If the Settlement contemplated by this Stipulation is approved by the Canadian Courts,
Nortel’s counsel and Canadian Class Counsel jointly shall apply to the respective Canadian Courts
for entry of Judgments substantially in the forms annexed hereto as Exhibits F and G.
SUPPLEMENTAL AGREEMENT
23. Simultaneously herewith, Lead Plaintiffs’ Counsel, Canadian Class Counsel and Nortel’s
Counsel are executing a “Supplemental Agreement” setting forth certain conditions under which this
Settlement may be terminated by Nortel if potential Class Members who
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purchased in excess of a certain number of shares of Nortel Securities traded during the Class
Period exclude themselves from the Class (the “Opt-out Threshold”). Unless otherwise directed by
the Courts, the Supplemental Agreement may be filed with the Opt-out Threshold redacted.
Notwithstanding the foregoing, the Opt-out Threshold may be disclosed to the Courts for purposes of
the approval of the Settlement, as may be required by the Courts, but such disclosure shall be
carried out to the fullest extent possible in accordance with the practices of the respective
Courts so as to maintain the Opt-out Threshold as confidential. In the event of a termination of
this Settlement pursuant to the Supplemental Agreement, this Stipulation shall become null and void
and of no further force and effect, with the exception of the provisions of 1 28 which shall
continue to apply. Notwithstanding the foregoing, the Stipulation shall not become null and void
as a result of the election by Nortel to exercise its option to withdraw from the Stipulation
pursuant to the Supplemental Agreement until the conditions set forth in the Supplemental Agreement
have been satisfied. The Supplemental Agreement is attached hereto as Exhibit C, with the Opt-out
Threshold redacted.
EFFECTIVE DATE OF SETTLEMENT, WAIVER OR TERMINATION
24. The “Effective Date” of Settlement shall be the date when all the following conditions of
settlement shall have occurred:
(a) approval by the United States District Court for the Southern District of New York of the
Settlement, following notice to the Class and a hearing, as prescribed by Rule 23 of the (United
States) Federal Rules of Civil Procedure;
(b) entry by the United States District Court for the Southern District of New York of a
Judgment, substantially in the form set forth in Exhibit B annexed hereto, and the expiration of
any time for appeal or review of such Judgment, or, if any appeal is filed, after such Judgment is
upheld on appeal in all material respects and is no longer subject to review upon
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appeal or review by writ of certiorari, or, in the event that the United States District Court
for the Southern District of New York enters an order and final Judgment in a form other than that
provided above (“Alternative U.S. Judgment”) and none of the parties hereto elect to terminate this
Settlement, the date that such Alternative U.S. Judgment becomes Final;
(c) approval of the Settlement by the Ontario Superior Court of Justice in the Ontario
Gallardi Action, following notice to the Ontario National Class and a hearing pursuant to the
Ontario Class Proceedings Act, 1992;
(d) entry by the Ontario Superior Court of Justice in the Ontario Gallardi Action of a
Judgment, substantially in the form set forth in Exhibit F annexed hereto, and the expiration of
any time for appeal or review of any and all of such Judgment, or, if any appeal is filed, after
any such judgment is upheld on appeal in all material respects and is no longer subject to review
upon appeal or otherwise, or, in the event that the Ontario Superior Court of Justice enters an
order and final judgment in a form other than that provided above (“Alternative Ontario Judgment”)
and none of the parties hereto elect to terminate this Settlement pursuant to ¶ 25(d) hereof within
30 days of the Ontario Superior Court of Justice entering the Alternative Ontario Judgment, the
date that such Alternative Ontario Judgment becomes Final;
(e) approval of the Settlement by the Superior Court of Quebec in the Quebec Skarstedt Action,
following notice to the Quebec Class and a hearing pursuant to the Quebec Code of Civil Procedure;
(f) entry by the Superior Court of Quebec in the Skarstedt Action of a Judgment, substantially
in the form set forth in Exhibit G annexed hereto, and the expiration of any time for appeal or
review of any and all of such Judgments, or, if any appeal is filed, after any such Judgment is
upheld on appeal in all material respects and is no longer subject to review
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upon appeal or otherwise, or, in the event that the Superior Court of Quebec enters an order
and final judgment in a form other than that provided above (“Alternative Quebec Judgment”) and
none of the parties hereto elect to terminate this Settlement pursuant to ¶ 25(d) hereof within 30
days of the Superior Court of Quebec entering an Alternative Quebec Judgment, the date that such
Alternative Quebec Judgment becomes Final;
(g) Nortel shall have used every commercially reasonable effort to cause (1), (2), (3) and (4)
below to have been obtained and Nortel shall have received, in form and substance satisfactory to
it:
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either (A) an MRRS decision document issued
pursuant to National Policy 12-201 – Mutual Reliance Review System for
Exemptive Relief Applications, or any successor, replacement or
amending regulatory instrument (“NI 12-201”) exempting the issuance,
delivery and distribution of the Gross Settlement Shares in accordance
with the terms of the Settlement from the dealer registration and
prospectus requirements of all applicable Canadian provincial and
territorial securities legislation, and imposing only those limitations
on resale of Gross Settlement Shares in any Canadian province or
territory that are substantially equivalent to those set forth in
subsection (3) of section 2.6 of National Instrument 45-102 — Resale
of Securities, together with all necessary comparable exemptive relief
issued by each of the non-principal regulators (as such term is defined
for the purposes of NI 12-201) that have opted out of the system for
the application for |
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the aforementioned MRRS decision document (the “Exemptive Relief’),
which Exemptive Relief shall be in form and substance satisfactory to
Lead Plaintiff’s Counsel acting reasonably; or (B) a final MRRS
decision document issued pursuant to National Policy 43-201 — Mutual
Reliance Review System for Prospectuses and Annual Information Forms,
or any successor, replacement or amending regulatory instrument, (“NI
43-201”) evidencing that a receipt has been obtained for a final
prospectus of Nortel relating to the Gross Settlement Shares in each
Canadian province and territory where any Settlement Shares may be
distributed, together with all necessary receipts for such final
prospectus issued by each of the non-principal regulators (as such
term is defined for purposes of NI 43-201) that have opted out of the
Mutual Reliance Review System for such prospectus; |
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(A) should it be necessary, a “no action”
letter from the United States Securities and Exchange Commission with
respect to the issuance, delivery and distribution of the Gross
Settlement Shares in accordance with the terms of the Settlement
pursuant to the exemption from registration set forth in Section
3(a)(10) under the (United States) Securities Act of 1933, 15 U.S.C. §
77c(a)(1), as amended (the “Securities Act”) (if necessary, the “No
Action Letter”); or (B) if a No Action Letter should be necessary and
not be obtained, Nortel shall register the Gross Settlement Shares and |
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notice of effectiveness shall have been received confirming that the
registration statement registering the Gross Settlement Shares under
the Securities Act and filed with the United States Securities and
Exchange Commission had been declared effective by such Commission; |
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all required approvals from the New York Stock
Exchange and the Toronto Stock Exchange with respect to the issuance,
delivery and distribution of the Gross Settlement Shares in accordance
with the terms of the Settlement (the “Stock Exchange Approvals”); and |
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all required approvals under U.S. state
securities or “blue sky” laws with respect to the issuance, delivery
and distribution of the Gross Settlement Shares in accordance with the
terms of the Settlement, including those with respect to the states of
Arizona and New York (“Blue Sky Approvals”); |
(h) all conditions, if any, of the Exemptive Relief, the No Action Letter, the Stock Exchange
Approvals and the Blue Sky Approvals, to the issuance and distribution of the Gross Settlement
Shares, have been satisfied; and
(i) expiration of the time to exercise the termination rights provided in ¶ 25 hereof.
25. Lead Plaintiff, the Canadian Representative Plaintiffs and Nortel shall each have the
right to terminate the Settlement and thereby this Stipulation by providing written notice of their
or its election to do so (“Termination Notice”) to one another hereto within thirty (30) days of
any of the following: (a) the United States District Court for the Southern District of New
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York declining to enter the Order for Notice and Hearing in any material respect; (b) any one
of the Canadian Courts declining to enter orders, in any material respect, in the form set forth in
Exhibits D and E; (c) any one of the Courts refusing to approve this Settlement as set forth in
this Stipulation for one or more of the Nortel II Actions; (d) any one of the Courts declining to
enter the corresponding Judgment for that court in any material respect; (e) the date upon which a
Judgment is modified or reversed in any material respect by any level of appellate court; (f) the
date upon which an Alternative Judgment is modified or reversed in any material respect by any
level of appellate court; and (g) the date upon which the settlement in the Nortel I Actions is
terminated; or (h) the conditions set forth in ¶ 24(i) and 24(j) hereof not having been satisfied
prior to forty-five (45) calendar days after the latter of (i) entry of the last Final Judgment
contemplated in ¶ 24 hereof or (ii) entry of the last final judgment in the Nortel I Actions.
26. Notwithstanding anything else in this Stipulation, Nortel may, in accordance with the
terms set for in the Supplemental Agreement, and in its sole and unfettered discretion, elect in
writing to terminate the Settlement and this Stipulation if the Opt-out Threshold is exceeded or as
otherwise provided in the Supplemental Agreement.
27. In the event that there is non-delivery by Nortel of any of the Net Settlement Shares
required to be delivered hereunder in accordance with ¶ 4(d) hereof, then Lead Plaintiff and the
Canadian Representative Plaintiffs shall consult with one another and, in the event of consensus,
may apply jointly to the Courts for orders at their option either terminating this Settlement as it
applies to the Class, directing specific performance of Nortel’s obligation to issue and/or deliver
such shares, or obtain such other available relief. In the event of non-consensus between Lead
Plaintiff and the Canadian Representative Plaintiffs, each shall apply forthwith to their
respective courts, on notice to one another, for an order either terminating this
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Settlement as it applies to their class, directing specific performance of Nortel’s obligation
to issue and/or deliver such shares, or obtain such other available relief. It is agreed that in
the event that an Order is obtained on such an application from one court terminating the
Settlement for one class, the Settlement shall be terminated for the balance of the Class and
orders to that effect shall be sought on consent from the remaining Courts.
28. Except as otherwise provided herein, in the event the Settlement is terminated, the
parties to this Stipulation shall be deemed to have reverted to their respective status in the
Nortel II Actions immediately prior to the execution of this Stipulation and, except as otherwise
expressly provided, the parties shall proceed in all respects as if this Stipulation and any
related orders had not been entered. Furthermore, an amount equal to the Cash Settlement Amounts
previously paid by Nortel and/or Nortel’s Insurers, as the case may be, shall be paid to Nortel
and/or Nortel’s Insurers, as the case may be, including the amount transferred by the escrow agents
in the Nortel I Actions to the Escrow Agent, together with any interest or other income earned
thereon or in respect thereof, less any Taxes paid or due with respect to such income, less any
amounts required to be paid to the Escrow Agent pursuant to the relevant escrow agreement, and less
any reasonable costs of administration and notice actually incurred and paid or payable from the
Cash Settlement Amount (as described in ¶ 7 hereof), less any applicable withholding taxes.
NO ADMISSION OF WRONGDOING
29. This Stipulation, whether or not consummated, and any proceedings taken pursuant to it:
(a) shall not be offered or received against any of the Nortel II Defendants as evidence of or
construed as or deemed to be evidence of any presumption, concession, or admission by any of those
defendants with respect to the truth of any fact alleged by any of the
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plaintiffs or the validity of any claim that has been or could have been asserted in the
Nortel II Actions or in any litigation, or the deficiency of any defense that has been or could
have been asserted in the Nortel II Actions or in any litigation, or of any liability, negligence,
fault, or wrongdoing of the Nortel II Defendants;
(b) shall not be offered or received against the Nortel II Defendants as evidence of a
presumption, concession or admission of any fault, misrepresentation or omission with respect to
any statement or written document approved or made by any of the Nortel II Defendants;
(c) shall not be offered or received against the Nortel II Defendants as evidence of a
presumption, concession or admission with respect to any liability, negligence, fault or
wrongdoing, or in any way referred to for any other reason as against any of the Nortel II
Defendants, in any other civil, criminal or administrative action or proceeding, other than such
proceedings as may be necessary to effectuate the provisions of this Stipulation; provided,
however, that if this Stipulation is approved by the Courts, Nortel II Defendants may refer to it
to effectuate the liability protection granted them hereunder;
(d) shall not be construed against any of the Nortel II Defendants as an admission or
concession that the consideration to be given hereunder represents the amount which could be or
would have been recovered after trial;
(e) shall not be construed as or received in evidence as an admission, concession or
presumption against Lead Plaintiffs, Canadian Representative Plaintiffs or any of the Class Members
that any of their claims are without merit, or that any defenses asserted by the Defendants have
any merit, or that damages recoverable under the Nortel II Actions would not have exceeded the
Gross Settlement Fund; and
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(f) shall not be construed as or received in evidence as an act of attornment to the
jurisdiction of any court by Lead Plaintiffs or Canadian Representative Plaintiffs by reason of
their participation or the participation of their respective counsel in proceedings taken pursuant
to the Stipulation to approve the Settlement.
MISCELLANEOUS PROVISIONS
30. All of the exhibits attached hereto are hereby incorporated by reference as though fully
set forth herein.
31. Nortel warrants as to itself that, as to the payments made by or on its behalf, at the
time of such payment that it made or caused to be made pursuant to ¶ 4 hereof, it was not
insolvent, nor did nor will the payment required to be made by or on behalf of it render it
insolvent, within the meaning of and/or for the purposes of the (United States) Bankruptcy Code,
including §§ 101 and 547 thereof. This warranty is made by Nortel and not by Nortel’s Counsel.
32. If a case is commenced in respect of any portion of the Settlement Amount (or any insurer
contributing funds to the Insurers’ Nortel I Cash Settlement Amount on behalf of any Nortel II
Defendant) under Title 11 of the United States Code (Bankruptcy), or a trustee, receiver or
conservator is appointed under any similar law, and in the event of the entry of a final order of a
court of competent jurisdiction determining the transfer of money to the Gross Cash Settlement Fund
or issuance of any Gross Settlement Shares or any portion thereof by or on behalf of such defendant
to be a preference, voidable transfer, fraudulent transfer or similar transaction and any portion
thereof is required to be returned, and such amount is not promptly deposited to the Gross Cash
Settlement Fund or such shares are not issued by others, then, at the election of Lead Plaintiffs
in respect of the Nortel II U.S. Action, and with respect to the Nortel II Canadian Actions at the
election of Canadian Representative Plaintiffs, the parties shall jointly apply to the respective
courts, as the case may be, to vacate and set aside the releases given and Judgments
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entered in favor of the Nortel II Defendants pursuant to this Stipulation, and which releases
and Judgments shall be null and void, and the parties shall be restored to their respective
positions in the Nortel II Actions as of the date a day prior to the date of this Stipulation and
any cash amounts in the Gross Cash Settlement Fund and any Gross Settlement Shares previously
issued by Nortel shall be returned as provided in ¶ 28 hereof.
33. The parties to this Stipulation intend the Settlement to be a final and complete
resolution of all disputes asserted or which could be asserted by the Class Members against the
Released Parties with respect to the Settled Claims. Accordingly, Lead Plaintiffs, Canadian
Representative Plaintiffs and Nortel agree not to assert in any forum that the Nortel II Actions
were brought by the plaintiffs or defended by defendants in those actions in bad faith or without a
reasonable basis. The parties hereto shall assert no claims of any violation of Rule 11 of the
Federal Rules of Civil Procedure relating to the prosecution, defense, or settlement of the Nortel
II Actions. The parties agree that the amount paid and the other terms of the Settlement were
negotiated at arm’s length in good faith by the parties, and reflect a settlement that was reached
voluntarily after consultation with experienced legal counsel.
34. This Stipulation may not be modified or amended, nor may any of its provisions be waived,
except by a writing signed by all parties hereto or their successors-in-interest.
35. The headings herein are used for the purpose of convenience only and are not meant to have
legal effect.
36. The administration and consummation of the Settlement as embodied in this Stipulation
shall be under the authority of the United States District Court for the Southern District of New
York and that Court shall retain jurisdiction for the purpose of entering orders providing for
awards of attorneys’ fees and expenses to Lead Plaintiff’s Counsel and enforcing
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the terms of this Stipulation. Notwithstanding the foregoing, the Canadian Courts shall
retain concurrent jurisdiction with respect to the administration, consummation and enforcement of
the Settlement as embodied in this Stipulation and with respect to members of the corresponding
Canadian Classes and shall retain jurisdiction for the purposes of entering orders providing for
counsel fees and expenses to Canadian Class Counsel.
37. The waiver by one party of any breach of this Stipulation by any other party shall not be
deemed a waiver of any other prior or subsequent breach of this Stipulation.
38. This Stipulation and its exhibits, the Supplemental Agreement, the various escrow
agreements governing the cash contributions by Nortel and its insurers toward the Settlement, and
the contemporaneous agreements with respect to Canadian Representative Plaintiffs confirming the
application of this Stipulation to the Nortel II Canadian Actions constitute the entire agreement
concerning the Settlement of the Nortel II Actions, and no representations, warranties, or
inducements have been made by any party hereto concerning this Stipulation, its exhibits and the
Supplemental Agreement other than those contained and memorialized in such documents.
39. This Stipulation may be executed in one or more counterparts. All executed counterparts
and each of them shall be deemed to be one and the same instrument.
40. This Stipulation shall be binding upon, and inure to the benefit of, the successors and
assigns of the parties hereto.
41. The construction and interpretation of this Stipulation and the Supplemental Agreement
shall be governed by the internal laws of the State of New York without regard to conflicts of
laws, except to the extent that federal law of the United States requires that federal law governs.
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42. This Stipulation shall not be construed more strictly against one party than another
merely by virtue of the fact that it, or any part of it, may have been prepared by counsel for one
of the parties, it being recognized that it is the result of arm’s-length negotiations between the
parties and all parties have contributed substantially and materially to the preparation of this
Stipulation.
43. All counsel and any other person executing this Stipulation and any of the exhibits
hereto, or any related settlement documents, warrant and represent that they have the full
authority to do so and that they have the authority to take appropriate action required or
permitted to be taken pursuant to the Stipulation to effectuate its terms.
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44. Lead Plaintiffs, Canadian Representative Plaintiffs and Nortel agree to cooperate fully with
one another in seeking Court approval of the Order for Notice and Hearing, the Stipulation and the
Settlement, and to promptly agree upon and execute all such other documentation as may be
reasonably required to obtain final approval by the Courts of the Settlement.
DATED: June 20, 2006
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BERNSTEIN LITOWITZ BERGER & GROSSMANN LLP |
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By:
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/s/ Max W. Berger
Max W. Berger (MB-5010)
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John P. Coffey (JC-3832) |
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Jeffrey N. Leibell (JL-1356) |
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1285 Avenue of the Americas |
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New York, New York 10019 |
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Telephone: (212) 554-1400 |
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Facsimile: (212) 554-1444 |
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Lead Plaintiffs’ Counsel |
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SHEARMAN & STERLING LLP |
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By:
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/s/ Stuart J. Baskin
Stuart J. Baskin (SB-9936)
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Tai H. Park (TP-2607) |
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Marc D. Ashley (MA-8896) |
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599 Lexington Avenue |
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New York, New York 10022-6069 |
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Telephone: (212) 848-4000 |
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Facsimile: (212) 848-7179 |
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Nortel’s Counsel |
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EXHIBIT A
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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In re NORTEL NETWORKS CORP.
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Civil Action No. 05-MD-1659 (LAP) |
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SECURITIES LITIGATION
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CLASS ACTION |
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This Document Relates To:
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ALL ACTIONS.
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PRELIMINARY ORDER FOR NOTICE AND HEARING IN CONNECTION WITH
SETTLEMENT PROCEEDINGS
WHEREAS, on June 20, 2006, the parties to the above-entitled action (the “Action”) entered
into a Stipulation and Agreement of Settlement (the “Stipulation”) which is subject to review under
Rule 23 of the (United States) Federal Rules of Civil Procedure and which, together with the
exhibits thereto, sets forth the terms and conditions for the proposed settlement of the claims
alleged in the Complaint on the merits and with prejudice; and the Court having read and considered
the Stipulation and the accompanying documents; and the parties to the Stipulation having consented
to the entry of this Order; and all capitalized terms used herein having the meanings defined in
the Stipulation;, and
WHEREAS, the Stipulation provides for the settlement and dismissal of the Canadian class
proceedings identified in the Stipulation (the “Canadian Class Actions”) and approval of the
Settlement in the courts before which the Canadian Class Actions are pending (the “Canadian
Courts”) is also being sought; and
WHEREAS, it is a condition to the effectiveness of the proposed Settlement herein that
additional putative class actions identified in the Stipulation brought against Nortel and certain
of
the defendants herein in this District and in Canadian Courts (the “Nortel I/II Actions”) also
be settled and dismissed.
NOW, THEREFORE, IT IS HEREBY ORDERED, this day of , 2006 that:
1. Pursuant to Rules 23(a) and (b)(3) of the (United States) Federal Rules of Civil Procedure,
and for the purposes of the Settlement only, this Action is hereby certified as a class action on
behalf of all persons and entities who purchased Nortel common stock or call options on Nortel
common stock or wrote (sold) put option on Nortel common stock (collectively, “Nortel Securities”)
during the period between April 24, 2003 through April 27, 2004, inclusive (the “Class Period”),
and who suffered damages thereby, including, but not limited to, those persons or entities who
traded in Nortel Securities on the New York Stock Exchange and/or the Toronto Stock Exchange (the
“U.S. Global Class” or “U.S. Global Class Members”). Excluded from the U.S. Global Class are (i)
the defendants; (ii) James Kinney (Finance Chief for Nortel’s Wireless Networks Division,
Richardson, Texas), Ken Taylor (Vice President for Nortel’s Enterprise Networks Division, Raleigh,
North Carolina), Craig Johnson (Finance Director for Nortel’s Wireline Networks Division,
Richardson, Texas), Doug Hamilton (Finance Director for Nortel’s Optical Networks Group, Montreal,
Quebec), Michel Gasnier (Vice President of Finance for Europe), Robert Ferguson (Vice President of
Finance for China), and William Bowrey (Controller for Asia); (iii) members of the immediate family
of each of the defendants and/or any of the individuals referenced above; (iv) any entity in which
any defendant and/or any of the individuals referenced above has a controlling interest; (v) any
parent, subsidiary or affiliate of Nortel; (vi) any person who was an officer or director of Nortel
or any of its subsidiaries or affiliates during the Class Period; and (vii) the legal
representatives, heirs, predecessors, successors or assigns of any of the excluded persons or
entities. Also excluded from the U.S. Global Class are any putative U.S. Global Class Members who
exclude themselves by filing a request for exclusion in accordance with the requirements set forth
in the Notice.
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2. The Court finds, for the purposes of the Settlement only, that the prerequisites for a
class action under Rules 23(a) and (b)(3) of the (United States) Federal Rules of Civil Procedure
have been satisfied in that: (a) the number of U.S. Global Class Members is so numerous that
joinder of all members thereof is impracticable; (b) there are questions of law and fact common to
the U.S. Global Class; (c) the claims of the named representatives are typical of the claims of the
U.S. Global Class they seek to represent; (d) the Lead Plaintiffs will fairly and adequately
represent the interests of the U.S. Global Class; (e) the questions of law and fact common to the
members of the U.S. Global Class predominate over any questions affecting only individual members
of the U.S. Global Class; and (f) a class action is superior to other available methods for the
fair and efficient adjudication of the controversy.
3. Pursuant to Rule 23 of the (United States) Federal Rules of Civil Procedure, and for the
purposes of the Settlement only, Lead Plaintiffs Ontario Teachers’ Pension Plan Board and the
Department of the Treasury of the State of New Jersey and its Division of Investment are certified
as Class Representatives.
4. A hearing (the “Settlement Fairness Hearing”) pursuant to Rule 23(e) of the (United States)
Federal Rules of Civil Procedure is hereby scheduled to be held before the Court on
, 2006, at ___:___.m. for the following purposes:
(a) to finally determine whether this Action satisfies the applicable prerequisites for class
action treatment under Rules 23(a) and (b) of the (United States) Federal Rules of Civil Procedure;
(b) to determine whether the proposed Settlement is fair, reasonable, and adequate, and should
be approved by the Court;
(c) to determine whether the Judgment as provided under the Stipulation should be entered,
dismissing the Complaint filed herein, on the merits and with prejudice, and to determine whether
the release by the U.S. Global Class of the Settled Claims, as set forth in the Stipulation, should
be provided to the Released Parties (as those terms are defined in the Stipulation);
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(d) to determine whether the proposed Plan of Allocation for the proceeds of the Settlement is
fair and reasonable, and should be approved by the Court;
(e) to consider Lead Plaintiffs’ Counsel’s application for an award of attorneys’ fees and for
reimbursement of expenses to Plaintiffs’ Counsel; and
(f) to rule upon such other matters as the Court may deem appropriate.
5. The Court recognizes and acknowledges that one consequence of the approval of the
Settlement at the Settlement Fairness Hearing, which shall be open to everyone to whom any Gross
Settlement Shares would be issued in the proposed Settlement, with adequate notice to be given to
all those persons, is that, pursuant to Section 3(a)(10) of the (United States) Securities Act of
1933, as amended, 15 U.S.C. § 77c(a)(1), the Gross Settlement Shares may be distributed to Class
Members (and to Plaintiffs’ Counsel as may be awarded by the respective Courts) without
registration and compliance with the prospectus delivery requirements of the U.S. securities laws
as the Gross Settlement Shares will be exempt from registration under the (United States)
Securities Act of 1933, 15 U.S.C. § 77c(a)(1), as amended, pursuant to Section 3(a)(10) thereunder.
The Court further acknowledges that Nortel will rely on such 3(a)(10) exemption (and Nortel will
not register the Gross Settlement Shares under the (United States) Securities Act of 1933) based on
the Court’s approval of the fairness of the Settlement.
6. The Court reserves the right to approve the Settlement with or without modification and
with or without further notice of any kind. The Court further reserves the right to enter its
Judgment approving the Stipulation and dismissing the Complaint on the merits and with prejudice
regardless of whether it has approved the Plan of Allocation or awarded attorneys’ fees and
expenses.
7. The Court approves the form, substance and requirements of the Notice of Pendency and
Certifications of Class Actions and Proposed Settlements, Motions for Attorneys’ Fees and
Settlement Fairness Hearings (the “Notice”) and the Proof of Claim form, annexed hereto as Tabs 1
and 2, respectively.
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8. The Court approves the appointment of The Garden City Group Inc. (“GCG”) as the Claims
Administrator. Upon approval of the Notice and the Proof of Claim and the appointment of GCG as
the Claims Administrator by each of the Canadian Courts (“Canadian Courts’ Approval”), the Claims
Administrator shall cause the Notice and the Proof of Claim, substantially in the forms annexed
hereto as Tabs 1 and 2, to be mailed, by first class mail, postage prepaid, on or before
days after entry of the last order, whether by this Court, the Court in the Nortel I U.S. Action,
or any of the Canadian Courts, approving the issuance of the Notice, to all U.S. Global Class
Members who can be identified with reasonable effort. Notices that are addressed to persons or
entities in Quebec shall be accompanied by a French language version of the Notice and Proof of
Claim forms. Nortel shall cooperate in making Nortel’s transfer records and shareholder
information available to the Claims Administrator no later than days following entry of
this Order for the purpose of identifying and giving notice to the U.S. Global Class. The Claims
Administrator shall use reasonable efforts to give notice to nominee purchasers such as brokerage
firms and other persons or entities who purchased Nortel common stock during the Class Period as
record owners but not as beneficial owners. Such nominee purchasers are directed, within seven (7)
days of their receipt of the Notice, to either forward copies of the Notice and Proof of Claim to
their beneficial owners or to provide the Claims Administrator with lists of the names and
addresses of the beneficial owners, and the Claims Administrator is ordered to send the Notice and
Proof of Claim promptly to such identified beneficial owners. Nominee purchasers who elect to send
the Notice and Proof of Claim to their beneficial owners shall send a statement to the Claims
Administrator confirming that the mailing was made as directed. Additional copies of the Notice
shall be made available to any record holder requesting such for the purpose of distribution to
beneficial owners, and such record holders shall be reimbursed from the Gross Settlement Fund, upon
receipt by the Claims Administrator of proper documentation, for the reasonable expense of sending
the Notice and Proofs of Claim to beneficial owners. Lead Plaintiffs’ Counsel shall, at or before
the Settlement Fairness Hearing, file with the Court proof of mailing of the Notice and Proof of
Claim.
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9. The Claims Administrator or the Escrow Agent or their agents are authorized and directed to
prepare any tax returns required to be filed on behalf of or in respect of the Gross Settlement
Fund and to cause any Taxes due and owing to be paid from the Gross Settlement Fund, and to
otherwise perform all obligations with respect to Taxes and any reporting or filings in respect
thereof as contemplated by the Stipulation, without further order of the Court.
10. Lead Plaintiffs’ Counsel shall submit their papers in support of final approval of the
Settlement and application for attorneys’ fees and reimbursement of expenses by no later than
forty-five (45) calendar days after the date set for mailing of the Notice.
11. The Court approves the form of Publication Notice of the Pendency of this class action and
the proposed settlement in substantially the form and content annexed hereto as Tab 3 and directs
that Lead Plaintiffs’ Counsel shall cause the Publication Notice to be published in Canada in
accordance with the Notice Plan attached hereto as Tab 4, and the Publication Notice shall also be
published in the U.S. on two different dates in the national editions of The Wall Street Journal,
USA Today, and The New York Times, once in Investor ‘s Business Daily, and once over the PR
Newswire, which publications shall begin within seven (7) calendar days of the mailing of the
Notice and in accordance with the Notice Plan. Lead Plaintiffs’ Counsel shall, at or before the
Settlement Fairness Hearing, file with the Court proof of the publication of the Publication
Notice.
12. The form and content of the Notice, and the method set forth herein of notifying the Class
of the Settlement and its terms and conditions, meet the requirements of Rule 23 of the (United
States) Federal Rules of Civil Procedure, Section 21 D(a)(7) of the (United States) Securities
Exchange Act of 1934, as amended, 15 U.S.C. 78u-4(a)(7), including by the (United States) Private
Securities Litigation Reform Act of 1995 (the “PSLRA”), Rule 23.1 of the Local Rules of the
Southern and Eastern Districts of New York, and due process, constitute the best notice practicable
under the circumstances, and shall constitute due and sufficient notice to all persons and entities
entitled thereto.
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13. In order to be entitled to participate in the Net Settlement Fund, in the event the
Settlement is effected in accordance with the terms and conditions set forth in the Stipulation,
each Class Member shall take the following actions and be subject to the following conditions:
(a) A properly executed Proof of Claim (the “Proof of Claim”), substantially in the form
attached hereto as Tab 2, must be submitted to the Claims Administrator, at the Post Office Box
indicated in the Notice, postmarked not later than one hundred twenty (120) days after the date set
for mailing the Notice. Such deadline may be further extended by court order. Each Proof of Claim
shall be deemed to have been submitted when postmarked (if properly addressed and mailed by first
class mail, postage prepaid) provided such Proof of Claim is actually received prior to the motion
for an order of the Court approving distribution of the Net Settlement Fund. Any Proof of Claim
submitted in any other manner shall be deemed to have been submitted when it was actually received
at the address designated in the Notice.
(b) The Proof of Claim submitted by each Class Member must satisfy the following conditions:
(i) it must be properly completed, signed and submitted in a timely manner in accordance with the
provisions of the preceding subparagraph; (ii) it must be accompanied by adequate supporting
documentation for the transactions reported therein, in the form of broker confirmation slips,
broker account statements, an authorized statement from the broker containing the transactional
information found in a broker confirmation slip, or such other documentation as is deemed adequate
by the Claims Administrator; (iii) if the person executing the Proof of Claim is acting in a
representative capacity, a certification of his current authority to act on behalf of the Class
Member must be included in the Proof of Claim; and (iv) the Proof of Claim must be complete and
contain no material deletions or modifications of any of the printed matter contained therein and
must be signed under penalty of perjury.
(c) As part of the Proof of Claim, each Class Member shall submit to the jurisdiction of the
applicable Court as set out in the Stipulation with respect to the claim submitted, and shall
(subject to effectuation of the Settlement) release all Settled Claims as provided in the
Stipulation.
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14. U.S. Global Class Members shall be bound by all determinations and judgments in this
Action, whether favorable or unfavorable, unless such persons request exclusion from the Class in a
timely and proper manner, as hereinafter provided. A U.S. Global Class Member wishing to make such
request shall mail the request in written form by first class mail postmarked no later than sixty
(60) calendar days after the date set for the mailing of the Notice to the address designated in
the Notice. Such request for exclusion shall clearly indicate the name, address and telephone
number of the person seeking exclusion, that the sender requests to be excluded from the U.S.
Global Class, and must be signed by such person. Such persons requesting exclusion are also
directed to state: the date(s), price(s), and number(s) of shares of all purchases and sales of
Nortel common stock, call options on Nortel common stock and put options on Nortel common stock
during the Class Period. The request for exclusion shall not be effective unless it provides the
required information and is made within the time stated above, or the exclusion is otherwise
accepted by the Court.
15. Comments and/or objections to the Settlement, the Plan of Allocation, or the application
by Lead Plaintiffs’ Counsel for an award of attorneys’ fees and reimbursement of expenses and any
supporting papers should be mailed, on or before sixty (60) days after the date set for mailing of
the Notice, to GCG at the address set forth in the Notice. Attendance at the hearing is not
necessary; however, persons wishing to be heard orally in opposition to the approval of the
Settlement, the Plan of Allocation, and/or the request by Lead Plaintiffs’ Counsel for attorneys’
fees are required to indicate in their written objection their intention to appear at the hearing.
Persons who intend to object to the Settlement, the Plan of Allocation, and/or Lead Plaintiffs’
Counsel’s application for an award of attorneys’ fees and expenses and desire to present evidence
at the Settlement Fairness Hearing must include in their written objections the identity of any
witnesses they may call to testify and exhibits they intend to introduce into evidence at the
Settlement Fairness Hearing. U.S. Global Class Members do not need to appear at the hearing or
take any other action to indicate their approval.
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16. Lead Plaintiffs’ Counsel shall submit their reply papers, if any, in support of final
approval of the Settlement and application for attorneys’ fees and reimbursement of expenses by no
later than seventy-five (75) calendar days after the date set for mailing of the Notice.
17. Any U.S. Global Class Member who does not object to the Settlement and/or the Plan of
Allocation, and any Class Member who does not object to Lead Plaintiffs’ Counsel’s application for
an award of attorneys’ fees and reimbursement of litigation expenses in the manner prescribed in
the Notice shall be deemed to have waived such objection and shall forever be foreclosed from
making any objection to the fairness, adequacy or reasonableness of the proposed Settlement, the
Order and Final Judgment to be entered approving the Settlement, the Plan of Allocation or the
application by Lead Plaintiffs’ Counsel for an award of attorneys’ fees and reimbursement of
expenses.
18. Pending final determination of whether the Settlement should be approved, the Lead
Plaintiffs, all U.S. Global Class Members, and each of them, and anyone who acts or purports to act
on their behalf, shall not institute, commence or prosecute any action which asserts Settled Claims
against any Released Party. The foregoing shall not be interpreted to apply to proceedings in
respect of the seeking of approval of the Settlement in the Canadian Courts.
19. As provided in the Stipulation, Lead Plaintiffs’ Counsel may pay the Claims Administrator
the reasonable fees and costs associated with giving notice to the Class and the review of claims
and administration of the Settlement out of the Gross Settlement Fund without further order of the
Court.
20. If (a) the Settlement is terminated by Nortel pursuant to ¶ 26 of the Stipulation; (b) any
specified condition to the Settlement set forth in the Stipulation is not satisfied and Lead
Plaintiffs’ Counsel, Canadian Representative Plaintiffs’ Counsel or Nortel elect to terminate the
Settlement as provided in ¶ 25 of the Stipulation; or (c) if the Settlement is terminated pursuant
to ¶ 27 of the Stipulation, then, in any such event, the terms of ¶ 28 of the Stipulation including
any amendment(s) thereof, shall apply, and this Preliminary Order certifying the Class and the
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Class Representatives for purposes of the Settlement shall be null and void, of no further
force or effect, and without prejudice to any party, and may not be introduced as evidence or
referred to in any actions or proceedings by any person or entity, and each party shall be restored
to his, her or its respective position as it existed immediately prior to the execution of the
Stipulation.
21. The Court retains jurisdiction over the Action to consider all further matters arising out
of or connected with the Settlement.
Dated: New York, New York
July 28, 2006
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UNITED STATES DISTRICT JUDGE |
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EXHIBIT A-1
NOTICE OF PENDENCY AND CERTIFICATIONS OF CLASS ACTIONS
AND PROPOSED SETTLEMENTS, MOTIONS FOR ATTORNEYS’ FEES
AND SETTLEMENT FAIRNESS HEARINGS (NORTEL II NOTICE)
This Notice relates to the following actions (the “Nortel II Actions”):
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In Re Nortel Networks Corp. Securities Litigation, Master File No. 04 Civ. 2115 (LAP) in
the United States District Court for the Southern District of New York; |
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Gallardi v. Nortel Networks Corporation, No. 05-CV-285606CP in the Ontario Superior
Court of Justice; |
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Skarstedt v. Corporation Nortel Networks, No. 500-06-000277-059 in the Superior Court of
Quebec District of Montreal; |
If you bought Nortel Networks Corporation (“Nortel”) common stock or call options on Nortel common
stock, or you wrote (sold) put options on Nortel common stock, during the period April 24, 2003
through April 27, 2004, inclusive (the “Class Period”), your rights may be affected by class action
lawsuit(s) and you may be entitled to a payment from a proposed class action settlement.
Courts in the United States and Canada have authorized this notice.
This is not a solicitation from a lawyer.
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The “Settlement” described herein will provide total proceeds worth approximately
$___, including $370,157,418 in cash, plus 314,333,875 shares of common stock
of Nortel (“Settlement Shares”), having an aggregate market value as of [date] of
approximately $___, for the benefit of the Class. described herein (See response to
question 1 below defining the “Class” and “Class Members”). Unless otherwise stated, all
dollar amounts referenced herein are in U.S. dollars. |
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In addition, Nortel will adopt the corporate governance provisions described in Appendix
A of this Notice. Nortel will also contribute to the Class one-quarter of the recovery, if
any, it obtains in existing litigation by Nortel against certain former senior corporate
officers. |
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The Settlement resolves lawsuits over whether Nortel misled investors about its historic
and future earnings during the Class Period. The Settlement is contingent upon
court-approval of the settlement of several related actions against Nortel and other
defendants in the United States and Canada (the “Nortel II Actions”). |
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Your legal rights are affected whether you act or do not act. Read this notice
carefully. |
YOUR LEGAL RIGHTS AND OPTIONS IN THIS SETTLEMENT:
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SUBMIT A CLAIM FORM
BY [November 30, 2006]
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The only way to get a distribution from the Net
Settlement Fund and Net Settlement Shares. |
Le présent avis est aussi disponible en français. Vous pouvez l’obtenir sans frais en vous
adressant à [Claim administrator + Web site] ou à Trudel & Johnston.
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EXCLUDE YOURSELF (Opt-out of
the Class)
BY [September 15, 2006]
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Get no payment. This is the only option
that allows you to ever be part of any
other lawsuit against Nortel and the
other Released Parties about the Settled
Claims (as those terms are defined in
the response to question 12 below). |
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OBJECT
BY [September 15, 2006]
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Write to the Court(s) about why you do
not like the Settlement, Plan of
Allocation, or Attorneys’ Fee
Applications. See responses to
questions 18, 20 and 22 below. |
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GO TO HEARINGS
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Ask to speak in Court(s) about the
Settlement, Plan of Allocation, or
Attorneys’ Fee Applications. See
responses to questions 18, 20 and 22
below. |
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DO NOTHING
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Get no payment. Give up rights. |
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These rights and options — and the deadlines to exercise them - are explained in this
notice. |
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The Courts in charge of the various U.S. and Canadian actions subject to this Settlement
still have to decide whether to approve the Settlement. Payments will be made if all of
the Courts approve the Settlement and after appeals, if any, are resolved. Please be
patient. |
SUMMARY NOTICE
Statement of Plaintiff Recovery
Pursuant to the Settlement described herein, a Settlement Fund consisting of $370,157,418 in cash
has been established, and 314,333,875 shares of Nortel common stock, will be provided for the
benefit of the Class. Lead Plaintiffs estimate that there were approximately 2.9 billion shares of
Nortel common stock traded during the Class Period which may have been damaged. Lead Plaintiffs
estimate that the average recovery per damaged share of Nortel common stock purchased during the
Class Period under the Settlement is 10.7¢ in cash and 0.127 Settlement Shares, per damaged
share1 before deduction of Court-awarded attorneys’ fees and expenses, and
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An allegedly damaged share might have been
traded more than once during the Class Period, and the indicated average
recovery would be the total for all purchasers of that share. |
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the costs of administration. Class Members who transacted in options on Nortel common stock may
also receive a payment from the Settlement Fund, but the various terms of those options and
available records concerning such option transactions do not permit a useful estimate to be
provided concerning the number of affected options or the recovery on those option transactions.
See response to question 9 below concerning payments to Class Members. A Class Member’s actual
recovery will be determined in accordance with the Plan of Allocation set forth on page ___below.
Statement of Potential Outcome of Case
The parties strongly disagree on both liability and damages and do not agree on the average amount
of damages per share that would be recoverable if plaintiffs were to have prevailed on each claim
alleged.
Plaintiffs estimated that the potential damages to the Classes in the Nortel II Actions and in
certain similar actions relating to a earlier class period (see response to question 8 below
describing these “Nortel I Actions”) could well have been in excess of the Gross Settlement Fund
(as defined in response to question 1 below). The defendants deny that they are liable to the
plaintiffs or the Class and deny that plaintiffs or the Class have suffered any damages.
Statement of Attorneys’ Fees and Costs Sought
As more fully described in response to question 17 below, plaintiffs’ counsel are moving before
their respective Courts for awards of attorneys’ fees and for reimbursement of expenses incurred in
the prosecution of their Actions as follows:
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Lead Plaintiffs’ Counsel in the U.S. Action are moving for an award to counsel
of attorneys’ fees in cash and shares in an amount not to exceed ten percent (10%)
of the Gross Settlement Fund, and for reimbursement of expenses incurred in
connection with the prosecution of the U.S. Action in an amount not to exceed $4.3
million. |
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Ontario National Class Counsel will move before the Ontario Court for approval
of an award to them of counsel fees in cash and shares in an amount not to exceed
point seven percent (0.7%) of the Gross Settlement Fund, and for reimbursement of
expenses incurred in connection with the prosecution of the Ontario National Action
in an amount not to exceed $225,000. |
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Quebec Class Counsel will move before the Quebec Court for approval of an award
to them of counsel fees in cash and shares in an amount not to exceed point forty
five percent (0.45%) of the Gross Settlement Fund, and for reimbursement of
expenses incurred in connection with the prosecution of the Quebec Action in an
amount not to exceed $150,000. |
The total requested attorneys fees and litigation expenses would amount to an average of 1.5¢ in
cash and 0.012 Settlement Shares, per damaged share in total for fees and expenses. Application
will also be made for reimbursement to the Lead Plaintiffs, Ontario Teachers’ Pension Plan
3
Board and the Department of the Treasury of the State of New Jersey and its Division of Investment
each for an amount not to exceed $30,000, for reimbursement of their reasonable costs and expenses
(including lost wages) directly relating to their representation of the “U.S. Global Class” (as
defined in response to question 1 below).
Further Information
Further information may be obtained by contacting the following counsel:
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For the U.S. Action: Lead Plaintiff’s Counsel: Jeffrey N. Leibell, Esq.,
Bernstein Litowitz Berger & Grossmann LLP, 1285 Avenue of the Americas, New York,
New York 10019. |
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For the Ontario National Action: Ontario National Class Counsel: Joel P.
Rochon, Rochon Genova LLP, 121 Richmond Street West, Suite 900, Toronto, Ontario
M5H 2K1. |
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For the Quebec Action: Quebec Class Counsel: Philippe H. Trudel, Trudel &
Johnston, 85 de la Commune East, 3rd Floor, Montreal, Quebec H2Y 1J1. |
Reasons for the Settlement
Plaintiffs’ principal reason for the Settlement is the benefit to be provided to the Class now.
This benefit must be compared to the risk that no recovery might be achieved after a contested
trial and likely appeals, possibly years into the future, and the further significant risk that
even if the plaintiffs and the Class successfully obtained a substantial judgment (after years of
additional litigation and appeals) the defendants might not be able to pay an amount significantly
greater than the value of the Gross Settlement Fund.
Lead Plaintiffs and Lead Plaintiffs’ Counsel, in consultation with their investment banking and
economic damages experts, considered the Company’s current and anticipated financial condition, and
also considered the extent of the Company’s applicable insurance and the likely depletion of that
insurance as a result of continued litigation, both of which, in their view, limited the amount
that might have been recovered for-the U.S. Global Class after trial.
[END OF COVER PAGE]
WHAT THIS NOTICE CONTAINS
4
Table of Contents
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SUMMARY NOTICE |
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2 |
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Statement of Plaintiff Recovery |
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Statement of Potential Outcome of Case |
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Statement of Attorneys’ Fees and Costs Sought |
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Further Information |
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Reasons for the Settlement |
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BASIC INFORMATION |
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1. Why did I get this notice package? |
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2. What are these lawsuits about? |
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3. Why are these class actions? |
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4. Why is there a Settlement? |
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WHO IS IN THE SETTLEMENT |
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5. How do I know if I am part of the Settlement? |
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6. Are there exceptions to being included? |
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7. What if I am still not sure I am included? |
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THE SETTLEMENT BENEFITS — WHAT YOU GET |
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8. What does the Settlement provide? |
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9. How much will my payment be? |
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HOW YOU GET A PAYMENT — SUBMITTING A PROOF OF CLAIM FORM |
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10. How can I get a payment? |
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11. When will I get my payment? |
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12. What am I giving up to get a payment or stay in the Class? |
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REQUESTING EXCLUSION (“OPTING OUT”) FROM THE SETTLEMENT |
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13. How do I get out of the proposed Settlement? |
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14. If I do not exclude myself, can I sue Nortel and the other
Released Parties for the same thing later? |
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15. If I exclude myself, can I get a payment from the proposed Settlement? |
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THE LAWYERS REPRESENTING YOU |
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16. Do I have a lawyer in this case? |
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17. How will the lawyers and the Class Representatives be paid? |
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OBJECTING TO THE SETTLEMENT, PLAN OF ALLOCATION AND APPLICATIONS
FOR ATTORNEYS’ FEES AND REIMBURSEMENT OF LITIGATION EXPENSES |
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18. How do I tell the Courts that I do not like the
Settlement, the proposed Plan of Allocation, and/or the applications for
attorneys’ fees and reimbursement of litigation expenses? |
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19. What is the difference between objecting and excluding? |
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THE SETTLEMENT FAIRNESS HEARINGS |
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20. When and where will the Courts decide whether to approve
the proposed Settlement? |
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21. Do I have to come to any of the Settlement Fairness Hearings? |
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22. May I speak at the Settlement Fairness Hearings? |
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IF YOU DO NOTHING |
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23. What happens if I do nothing at all? |
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GETTING MORE INFORMATION |
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24. Are there more details about the proposed Settlement? |
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25. How do I get more information? |
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PLAN OF ALLOCATION OF SETTLEMENT PROCEEDS AMONG CLASS MEMBERS |
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SPECIAL NOTICE TO SECURITIES BROKERS AND OTHER NOMINEES |
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NORTEL: CORPORATE GOVERNANCE PROVISIONS |
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BASIC INFORMATION
1. Why did I get this notice package?
You or someone in your family may have purchased Nortel common stock or call options on Nortel
common stock, or wrote (sold) put options on Nortel common stock during the period between April
24, 2003 through April 27, 2004, inclusive. Such purchasers may be members of
the Classes in the Nortel II Actions (as defined below) and are generally referred to herein as
“Class Members” and are collectively referred to as the “Class.” Class Members include members of
the “U.S. Global Class,” the “Ontario National Class,” and/or the “Quebec Class.”
The Courts have directed that this Notice be sent to Class Members because they have a right to
know about their options prior to the Courts deciding whether to approve the settlement of these
lawsuits, and to understand how a class action lawsuit may generally affect their rights. If the
Courts approve the Settlement, and after any objections and appeals are resolved, an administrator
appointed by the Courts will make the payments that the Settlement allows.
This package explains the lawsuits, the Settlement, Class Members’ legal rights, what benefits are
available, who is eligible for them, and how to get them.
The Courts in charge of the Nortel II Actions are as follows:
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Court |
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Action |
United States District
Court for the Southern
District of New York
(“U.S. Court”)
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In re Nortel Networks Corp. Securities
Litigation, Master File No. 04 Civ. 2115 (LAP)
(“U.S. Action”) |
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Ontario Superior Court of
Justice (“Ontario Court”)
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Gallardi v. Nortel Networks Corp., No.
05-CV-285606CP (“Ontario National Action”) |
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Superior Court of Quebec,
District of Montreal
(“Quebec Court”)
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Skarstedt v. Corporation Nortel Networks,
No. 500-06-000277-059 (“Quebec Action”) |
The entities who sued are called the plaintiffs, and the company and the persons they sued, Nortel
and certain of its officers and directors, are called the defendants.
The Settlement in the U.S. Action resolves the claims on behalf of persons or entities, wherever
located, who bought Nortel common stock or call options on Nortel common stock or who wrote (sold)
put options on Nortel common stock during the period April 24, 2003 through April 27, 2004,
inclusive, and suffered damages thereby, including, but not limited to, those persons or entities
who traded in Nortel Securities on the New York Stock Exchange and/or the Toronto Stock Exchange
(the “U.S. Global Class”). In addition, the Settlement covers the two Canadian actions referred to
above (the “Canadian Actions”). The Settlement in the Canadian Actions resolve the claims on
behalf of the following persons and entities:
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Ontario National Class: All persons or entities, except members of the Quebec Class,
who while residing in Canada at the time, purchased Nortel common stock or call options on
Nortel common stock, or wrote (sold) put options on Nortel common stock, during the period
between April 24, 2003 through April 27, 2004, inclusive. |
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• |
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Quebec Class: All persons or entities who, while residing in Quebec at the time,
purchased Nortel common stock or call options on Nortel common stock, or wrote (sold) put
options on Nortel common stock, during the period between April 24, 2003 through |
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April 27, 2004, inclusive. For purposes of the definition of Quebec Class, an entity means
a legal person established for a private interest, a partnership or an association if at all
times during the 12-month period preceding February 18, 2005, not more than 50 persons bound
to it by contract of employment were under its direction or control and if it is dealing at
arm’s length with the representative of the Quebec Class. Other entities may be members of
the Ontario National Class. |
Members of the classes certified in the Canadian Actions who suffered damages as a result of their
Class Period transactions in Nortel securities are also members of the U.S. Global Class.
Regardless of how many classes you are a member of, you will not be entitled to recover more than
once for your claim.
2. What are these lawsuits about?
Nortel is a Canadian corporation with its principal executive offices located in Brampton, Ontario,
Canada and has offices located throughout the United States and Canada. Nortel filed annual,
quarterly and other reports with the Ontario Securities Commission and the (United States)
Securities and Exchange Commission (the “SEC”) and its common stock is listed and traded on both
the Toronto Stock Exchange and the New York Stock Exchange under the symbol NT. Nortel is engaged
in the business of providing networking and communication services to customers located in over 150
countries.
On September 10, 2004, Lead Plaintiffs in the U.S. Acton filed a Consolidated Class Action
Complaint (the “Complaint”), which alleged that Nortel and certain of its former officers
perpetrated a fraud on the investing public by improperly accounting for the Company’s reserve
accounts, reversing millions of dollars into income to make the market believe that Nortel had
returned to profitability, when, in fact, it had not.
Lead Plaintiffs filed their Second Amended Consolidated Class Action Complaint (the “Second Amended
Complaint”) on September 16, 2005 based on Lead Plaintiffs’ Counsel’s extensive discovery efforts,
which included a targeted review of a substantial amount of the approximately 21 million pages of
documents produced by Nortel alone. In addition to the above, the Second Amended Complaint alleged
that the members the Audit Committee of Nortel’s Board of Directors (the “Audit Committee
Defendants”) violated Section 10(b) of the Exchange Act and SEC Rule 10b-5 promulgated thereunder
by issuing materially false and misleading statements during the Class Period in a scheme to
artificially inflate the value of Nortel publicly-traded securities. Specifically, Lead Plaintiffs
alleged that the Audit Committee Defendants disregarded the warning provided to them by Nortel’s
auditors, Deloitte & Touche LLP (“D&T’), that Nortel was reversing hundreds of millions of dollars
of reserves into income at the same time that Nortel’s projected losses turned into profits, and
that the Audit Committee Defendants ignored D&T’s recommendation that Nortel institute a rigorous
review of its remaining balance sheet provisions, choosing instead to approve numerous financial
disclosures reporting positive earnings results and a premature restatement that deceived investors
as to Nortel’s true financial condition.
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Similar factual allegations and claims are made in the Canadian Actions under Canadian law. The
defendants deny that they violated any laws or did anything wrong. Defendants believe that their
actions were proper under the U.S. federal securities laws and applicable Canadian law, assert that
they are not liable to the plaintiffs or the Class, and have asserted several affirmative defenses
to the allegations in the Complaints.
3. Why are these class actions?
In a class action, one or more people, called class representatives, sue on behalf of people who
have similar claims. All these people are a class or class members. Bringing a case, such as this
one, as a class action allows uniform adjudication of many similar claims of persons and entities
that might be economically too small to bring in individual actions. One court resolves the issues
for all class members, except for those who exclude themselves from the class.
In these Nortel II Actions the class representatives are:
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Nortel II Action |
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Class Representatives |
U.S. Action
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Ontario Teachers’ Pension Plan Board and the
Department of the Treasury of the State of New
Jersey and its Division of Investment |
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Ontario National Action
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Peter Gallardi |
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Quebec Action
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Clifford W. Skarstedt |
4. Why is there a Settlement?
The parties recognized that the claims asserted in the Nortel I Actions, as well as in the Nortel
II Actions, if ultimately proved by the plaintiffs in those actions, could have resulted in
Judgments that exposed defendants to substantial damage awards. Plaintiffs recognized that, even
if they were successful in obtaining judgments against Nortel and the other defendants, there was a
significant risk that such judgments would not be fully collectible. Nortel recognized that the
continued defense of the Nortel I Actions and the Nortel II Actions would require significant
attention of its management and would distract Nortel from pursuing its business affairs, and that
a plaintiffs’ judgment could be a very significant impediment to Nortel’s future success.
Accordingly, the parties considered that a resolution of the Nortel I Actions and the Nortel II
Actions was advisable.
The Courts have not finally decided in favor of the plaintiffs or the defendants. Instead, all
parties agreed to a settlement. That way, they avoid the risks and cost of trial, the people
affected will get compensation, and Nortel will be released of burdensome and distracting
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litigation that potentially could be a significant impediment to Nortel’s future success. The
Class Representatives and their counsel think the Settlement is fair, reasonable and adequate, and
in the best interests of, all Class Members.
WHO IS IN THE SETTLEMENT
To see if you will get cash and Nortel common stock from this Settlement, you first have to decide
if you are a Class Member.
5. How do I know if I am part of the Settlement?
The U.S. Court decided for the purposes of the proposed Settlement in the U.S. Action that everyone
who fits the following description is a Class Member: all persons and entities who purchased
Nortel common stock, who purchased call options on Nortel common stock, or who wrote (sold) put
options on Nortel common stock (the “Nortel Securities”) during the period between April 24, 2003
through April 27, 2004, inclusive (the “Class Period”) and who suffered damages thereby, including,
but not limited to, those persons or entities who traded in Nortel Securities on the New York Stock
Exchange and/or the Toronto Stock Exchange. The U.S. Global Class is not limited to U.S.
residents.
The two Canadian Courts generally decided for the purposes of the proposed Settlement that everyone
residing in Canada who fits the following description will be Class Members: all persons and
entities who purchased Nortel common stock, who purchased call options on Nortel common stock, or
who wrote (sold) put options on Nortel common stock during the period between April 24, 2003
through April 27, 2004, inclusive. To determine which specific Canadian Class you might be part
of, please see the definitions of Ontario National Class and Quebec Class above in the response to
question 1. Unlike the requirements for membership in the U.S. Global Class, there is no
requirement for you to have suffered damages to be a member of Ontario National Class, or Quebec
Class.
6. Are there exceptions to being included?
Excluded from the Class are (i) Nortel, Frank Dunn, Douglas C. Beatty, Michael J. Gollogly, John
Edward Cleghorn, Robert Ellis Brown, Robert Alexander Ingram, Guylaine Saucier, and Sherwood
Hubbard Smith, Jr.; (ii) James Kinney (Finance Chief for Nortel’s Wireless Networks Division,
Richardson, Texas), Ken Taylor (Vice President for Nortel’s Enterprise Networks Division, Raleigh,
North Carolina), Craig Johnson (Finance Director for Nortel’s Wireline Networks Division,
Richardson, Texas), Doug Hamilton (Finance Director for Nortel’s Optical Networks Group, Montreal,
Quebec), Michel Gasnier (Vice President of Finance for Europe), Robert Ferguson (Vice President of
Finance for China), and William Bowrey (Controller for Asia); (iii) members of the immediate family
of each of the defendants and/or any of the individuals referenced above; (iv) any entity in which
any defendant and/or any of the individuals referenced above has a controlling interest; (v) any
parent, subsidiary or affiliate of
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Nortel; (vi) any person who was an officer or director or Nortel or any of its subsidiaries or
affiliates during the Class Period; and (vii) the legal representatives, heirs, predecessors,
successors or assigns of any of the excluded persons or entities (the “Excluded Persons”).
If one of your mutual funds owned shares of Nortel common stock during the Class Period, that alone
does not make you a Class Member. You are a Class Member only if you directly purchased shares of
Nortel common stock, purchased call options on Nortel common stock, or wrote (sold) put options on
Nortel common stock, during the Class Period. Contact your broker to see if you purchased shares
of Nortel common stock, purchased call options on Nortel common stock, or wrote (sold) put options
on Nortel common stock, during the Class Period.
If you sold Nortel common stock, sold call options on Nortel common stock, or purchased put options
on Nortel common stock during the Class Period that alone does not make you a Class Member. You
are a Class Member only if you purchased Nortel common stock, purchased call options on Nortel
common stock, or wrote (sold) put options on Nortel common stock during the Class Period.
7. What if I am still not sure I am included?
If you are still not sure whether you are included, you can ask for free help. You can call
1-800-___-___or visit [www. .com] for more information. Or you can fill out and
return the Proof of Claim form described in response to question 10 below, to see if you qualify.
Note, however, that if you return a Proof of Claim form you will be releasing all your “Settled
Claims” against the “Released Parties.” (See response to question 12 below.)
THE SETTLEMENT BENEFITS — WHAT YOU GET
8. What does the Settlement provide?
In exchange for the Settlement and/or dismissal of the Nortel H Actions, Nortel and its insurers
agreed to create cash settlement funds for the benefit of the Class herein consisting of
$370,157,418 in cash, which is earning interest, and Nortel agreed to issue 314,333,875 Settlement
Shares of its common stock, having an aggregate market value as of [date] of [$ ], to be
divided, after fees and expenses as awarded by the Courts, among all Class Members who submit valid
Proof of Claim forms. Nortel has also agreed to share with the Class 25% of any actual gross
recovery obtained in existing litigation against certain former Nortel officers (the “Contingent
Recovery”). The cash, Settlement Shares, and Contingent Recovery, and any interest or dividends
earned thereon, are referred to as the “Gross Settlement Fund.”
In addition, Nortel will adopt the corporate governance provisions in Appendix A to this Notice.
A separate lawsuit, In re Nortel Networks Corp. Securities Litigation, Consolidated Civil Action
No. 01 Civ. 1855 (RMB) (S.D.N.Y.) and related Canadian actions in Ontario, Quebec and British
Columbia (the “Nortel I Actions”), are also being settled on behalf of investors who
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purchased Nortel common stock or call options on Nortel common stock, or wrote (sold) put
options on Nortel common stock, during the period October 24, 2000 through February 15, 2001,
inclusive (the “Nortel I Class Period”), including, but not limited to, those persons or entities
who traded in such Nortel securities on the New York Stock Exchange and/or the Toronto Stock
Exchange. The settlement in the Nortel I Actions will provide $438,667,428 in cash and 314,333,875
Settlement Shares to the members of the Classes in the Nortel I Actions. It is a condition of both
the Settlement in the Nortel II Actions and the settlement in the Nortel I Actions that the
Settlement be approved by each of the Courts in all of the actions. The Settlement is also
contingent upon appropriate securities regulatory and stock exchange approvals.
9. How much will my payment be?
The amount of your payment and Settlement Shares will depend on the number of valid Proof of Claim
forms that Class Members send in, how many shares of Nortel common stock you bought, the number of
call options on Nortel common stock you bought, and the number of put options on Nortel common
stock you wrote (sold), and when you bought and sold them.
The value of the Settlement Shares is expected to fluctuate over time and is not guaranteed. No
representation can be made as to what the value of the Settlement Shares may be at the time the
Settlement Shares are distributed to Class Members who submitted acceptable Proofs of Claim. Class
Members receiving Settlement Shares who may be deemed to be “affiliates” of Nortel, within the
meaning of (United States) federal securities laws, would be subject to certain limitations on the
resale of Settlement Shares as provided in Rule 145 under the (United States) Securities Act of
1933, as amended, 15 U.S.C. § 77c(a)(1). Any Class Member who might be deemed to be an affiliate
should consult with counsel as to these limitations. In addition, the resale of the Settlement
Shares in Canada may be subject to certain limitations under Canadian securities laws, which may
affect some Class Members.
You can calculate your Recognized Claim in accordance with the formula shown below in the Plan of
Allocation. It is unlikely that you will get a payment for all of your Recognized Claim. After
all Class Members have sent in their Proof of Claim forms, the payment you get in cash and Nortel
common stock will be part of the Net Cash Settlement Fund and a part of the Net Settlement Shares
equal to your Recognized Claim divided by the total of everyone’s Recognized Claims. See the Plan
of Allocation on page [___] for more information on how your Recognized Claim will be determined.
Payments to members of the Quebec Class may be subject to deductions pursuant to Quebec law payable
to the Fonds d’aide aux recours collectifs of Quebec.
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HOW YOU GET A PAYMENT — SUBMITTING A PROOF OF CLAIM FORM
10. How can I get a payment?
To qualify for a payment, you must send in a Proof of Claim form. A Proof of Claim form is being
circulated with this Notice. You may also get a Proof of Claim form on the Internet at
[www. .com]. Read the instructions carefully, fill out the Proof of Claim form, include
all the documents the form asks for, sign it, and mail it, by first class mail, postmarked no later
than , 2006.
11. When will I get my payment?
The U.S. Court will hold a hearing on , 2006, to decide whether to approve the
Settlement. Settlement approval hearings will be held in the Canadian Actions on dates shown below
in the response to question 20. The Courts in the Nortel I Actions will also hold hearings in the
same time frame as these hearings. Approval of settlement of the Nortel I Actions is also a
condition to the Settlement of these actions. If all the Courts approve the Settlement, there may
be appeals. It is always uncertain whether these appeals can be resolved, and resolving them can
take time, perhaps more than a year. It also takes time for all the Proofs of Claim to be
processed. After conclusion of the approval hearings, any appeals, and claims processing, the
funds and Settlement Shares will be distributed. Please be patient.
12. What am I giving up to get a payment or stay in the Class?
Unless you validly request exclusion (“opt out”), you are staying in the Class, and that means
that, upon the “Effective Date,” you will release all “Settled Claims” (as defined below) against
the “Released Parties” (as defined below).
“Settled Claims” means any and all claims, debts, demands, rights or causes of action, suits,
matters, and issues or liabilities whatsoever (including, but not limited to, any claims for
damages, interest, attorneys’ fees, expert or consulting fees, and any other costs, expenses or
liability whatsoever), whether based on United States or Canadian federal, state, provincial,
local, statutory or common law or any other law, rule or regulation, whether fixed or contingent,
accrued or unaccrued, liquidated or unliquidated, at law or in equity, matured or unmatured,
whether class or individual in nature, including both known claims and Unknown Claims (herein
defined), (i) that have been asserted in any of the Nortel II Actions against any of the Released
Parties, or (ii) that could have been asserted in any forum by the Class Members or any of them
against any of the Released Parties which arise out of or are based upon the allegations,
transactions, facts, matters or occurrences, representations or omissions involved, set forth, or
referred to in the Nortel II Actions and which relate to the purchase of Nortel common stock or
call options on Nortel common stock or the writing (sale) of put options on Nortel common stock
during the Class Period, or (iii) any oppression or other claims under the Canada Business
Corporations Act, R.S.C. 1985, c. C-44, as amended, that arise out of or are based upon the
allegations, transactions, facts, matters or occurrences, representations or omissions, set forth
or referred to in the Nortel II Actions. “Settled Claims” does not mean or include claims, if any,
against the Released Parties arising under the (United States) Employee Retirement Income Security
Act of 1974, as amended, 29 U.S.C. § 1001, et seq. (“ERISA”) that are not common to
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all Class Members and which ERISA claims are the subject of an action pending before the Judicial
Panel on Multidistrict Litigation, denominated In re Nortel Networks Securities and “ERISA”
Litigation, MDL Docket No. 1537. “Settled Claims” further does not include: (a) the action in
Rohac et al. v. Nortel Networks Corp. et al., Ontario Superior Court of Justice, Court File No.
04-CV-3268 and (b) the application brought in Indiana Electrical Workers Pension Trust Fund IBEW
and Laborers Local 100 and 397 Pension Fund v. Nortel Networks Corporation, Ontario Superior Court
of Justice, Court File No. 49059, for leave pursuant to the Canada Business Corporations Act to
commence a representative action in the name of and on behalf of Nortel against certain of the
Released Parties.
“Released Parties” means any and all of the defendants in the Nortel II Actions (namely: Nortel,
Frank Dunn, Douglas C. Beatty, Michael J. Gollogly, John Edward Cleghorn, Robert Ellis Brown,
Robert Alexander Ingram, Guylaine Saucier, and Sherwood Hubbard Smith, Jr., and Deloitte & Touche
LLP), their past or present subsidiaries, parents, principals, affiliates, general or limited
partners or partnerships, successors and predecessors, heirs, assigns, officers, directors, agents,
employees, attorneys, advisors, investment advisors, investment bankers, underwriters, insurers,
co-insurers, re-insurers, accountants, auditors, consultants, administrators, executors, trustees,
personal representatives, immediate family members and any person, firm, trust, partnership,
corporation, officer, director or other individual or entity in which any defendants in the Nortel
II Actions has a controlling interest or which is related to or affiliated with any of the
defendants in the Nortel II Actions, and the legal representatives, heirs, executors,
administrators, trustees, successors in interest or assigns of the defendants in the Nortel II
Actions.
“Unknown Claims” means any and all Settled Claims which any of the Lead Plaintiffs, Canadian
Representative Plaintiffs, or Class Members do not know or suspect to exist in his, her or its
favor at the time of the release of the Released Parties, which if known by him, her or it might
have affected his, her or its decision(s) with respect to the Settlement. With respect to any and
all Settled Claims, the parties stipulate and agree that, upon the Effective Date, the Lead
Plaintiff, Canadian Representative Plaintiffs shall expressly waive, and each Class Member shall be
deemed to have waived, and by operation of the Judgments shall have expressly waived, any and all
provisions, rights and benefits conferred by any law of any state, province or territory of the
United States or Canada, or principle of common law, which is similar, comparable, or equivalent to
Cal. Civ. Code § 1542, which provides:
A general release does not extend to claims which the creditor does
not know or suspect to exist in his favor at the time of executing
the release, which if known by him must have materially affected his
settlement with the debtor.
Lead Plaintiff, Canadian Representative Plaintiffs and Nortel acknowledge, and Class Members by
operation of law shall be deemed to have acknowledged, that the inclusion of “Unknown Claims” in
the definition of Settled Claims was separately bargained for and was a key element of the
Settlement.
In addition, upon the Effective Date of the Settlement, all Class Members on behalf of themselves,
their personal representatives, heirs, executors, administrators, trustees, successors
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and assigns, with respect to each and every Settled Claim, release and forever discharge, and be
forever enjoined from prosecuting, any Settled Claims against any of the Released Parties, and
shall not institute, continue, maintain or assert, either directly or indirectly, whether in the
United States, Canada or elsewhere, on their own behalf or on behalf of any class or any other
person, any action, suit, cause of action, claim or demand against any Released Party or any other
person who may claim any form of contribution or indemnity (save for a contractual indemnity) from
any Released Party in respect of any Settled Claim or any matter related thereto, at any time on or
after the Effective Date.
The “Effective Date” will occur when Orders entered by all the Courts approving the Settlement in
the Nortel I Actions and the Nortel II Actions become final and not subject to appeal and when all
conditions of the Stipulation have been met.
If you remain a member of the Class, the applicable Court’s orders will apply to you and legally
bind you.
REQUESTING EXCLUSION (“OPTING OUT”) FROM THE SETTLEMENT
If you do not want a payment from this Settlement, but you want to keep any right you may have on
your own to sue or continue to sue Nortel and the other Released Parties about the Settled Claims,
then you must take steps to get out of the Class. This process is called excluding yourself from
— or is sometimes referred to as “opting out” of— the Class. Nortel may withdraw from and
terminate the Settlement if persons or entities who would otherwise be Class Members, and who
purchased in excess of a certain amount of Nortel common stock, opt out of the Class.
13. How do I get out of the proposed Settlement?
To opt out of the Class, you must send a signed letter by mail stating that you “request exclusion
from the Class in the Nortel II Securities Litigation”. Your letter should include the date(s),
price(s), and number(s) of shares of all purchases and sales of Nortel common stock and/or Nortel
common stock options during the Class Period. In addition, be sure to include your name, address,
telephone number, and your signature. You must mail your exclusion request by first class mail
postmarked no later than , 2006 to:
Nortel II Securities Litigation Exclusions
c/o The Garden City Group, Inc. Claims Administrator
P.O. Box 0000
City, ST 00000-0000
You cannot exclude yourself by telephone or by e-mail. If you ask to be excluded, you will not get
any settlement payment, and you cannot object to the Settlement. You will not be legally bound by
anything that happens in these Nortel II Actions, and you may be able to sue (or continue to sue)
Nortel and the other Released Parties in the future.
14. If I do not exclude myself, can I sue Nortel and the other Released Parties for the same thing later?
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No. Unless you exclude yourself, you give up any rights to sue Nortel and the other Released
Parties for any and all Settled Claims. If you have a pending lawsuit, speak to your lawyer in
that case immediately. You must exclude yourself from the Class to continue your own lawsuit.
Remember, the exclusion deadline is 2006.
15. If I exclude myself, can I get a payment from the proposed Settlement?
No. If you exclude yourself, do not send in a Proof of Claim form to ask for any money or shares.
But, you may exercise any right you may have to sue, continue to sue, or be part of a different
lawsuit against Nortel and the other Released Parties.
THE LAWYERS REPRESENTING YOU
16. Do I have a lawyer in this case?
The following firms represent Class Members:
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For the U.S. Action: Lead Plaintiffs’ Counsel Bernstein Litowitz Berger &
Grossmann LLP, 1285 Avenue of the Americas, New York, New York 10019, together with
Lowenstein Sandler P.C., 65 Livingston Avenue, Roseland, New Jersey 07068; |
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• |
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For the Ontario National Action: Rochon Genova LLP, 121 Richmond Street West,
Suite 900, Toronto, Ontario M5H 2K1 and Lerners LLP, 130 Adelaide Street West,
Suite 2400, Toronto, Ontario M5H 3P5; |
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For the Quebec Action: Trudel & Johnston s.e.n.c., 85 de la Commune East,
3rd Floor, Montreal, Quebec H2Y 1J1; |
These lawyers are called Class Counsel. You will not be separately charged for these lawyers. The
U.S. Court will determine the amount of lawyers’ fees and expenses to be awarded to the law firms
in the U.S. Action. The Ontario Court will determine the amount of lawyers’ fees and expenses to
be awarded to the law firms in the Ontario National Action. The Quebec Court will determine the
amount of lawyers’ fees and expenses to be awarded to the law firms in the Quebec Action. All
lawyers’ fees and expenses awarded by the respective Courts will be paid from the Gross Settlement
Fund. Class Members may, but are not required to, hire their own lawyers at their own expense.
17. How will the lawyers and the Class Representatives be paid?
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Plaintiffs’ counsel are moving before their respective Courts for awards of fees and for
reimbursement of expenses incurred in the prosecution of their Actions as follows:
Lead Plaintiffs’ Counsel in the U.S. Action, are moving before the U.S. Court for an award to
counsel of attorneys’ fees in cash and shares in an amount not to exceed ten percent (10%) of the
Gross Settlement Fund after deducting litigation expenses awarded by the U.S. Court, and for
reimbursement of expenses incurred in connection with the prosecution of the U.S. Action in an
amount not to exceed $4,300,000. Plaintiffs’ counsel have agreed that, notwithstanding the terms
of their retainer agreement with Lead Plaintiffs, two large public pension funds, which sets a fee
of approximately 12.5% of the Gross Settlement Fund, they will seek a fee no greater than 10%.
Lead Plaintiffs’ Counsel has not advised the Lead Plaintiffs with respect to their review of a
proposed fee application or their determination as to whether the Lead Plaintiffs should approve a
proposed fee application, including the amount thereof, in whole or in part.
Ontario National Class Counsel will move before the Ontario Court for approval of an award to them
of counsel fees in cash and shares in an amount not to exceed point seven percent (0.7%) of the
Gross Settlement Fund, and for reimbursement of expenses incurred in connection with the
prosecution of the Ontario National Action in an amount not to exceed $225,000.
Quebec Class Counsel will move before the Quebec Court for approval of an award to them of counsel
fees in cash and shares in an amount not to exceed point forty five percent (0.45%) of the Gross
Settlement Fund and for reimbursement of expenses incurred in connection with the prosecution of
the Quebec Action in an amount not to exceed $150,000
Plaintiffs’ counsel, without further notice to the Class, may subsequently apply to the appropriate
Court for fees and expenses incurred in connection with administering and distributing the
settlement proceeds to the members of the Class and any proceedings subsequent to the hearings.
Application will also be made for reimbursement to the Lead Plaintiffs, Ontario Teachers’ Pension
Plan Board and the Department of the Treasury of the State of New Jersey and its Division of
Investment each for an amount not to exceed $30,000, for reimbursement of their reasonable costs
and expenses (including lost wages) directly relating to their representation of the U.S. Global
Class.
OBJECTING TO THE SETTLEMENT, PLAN OF ALLOCATION AND
APPLICATIONS FOR ATTORNEYS’ FEES AND REIMBURSEMENT
OF LITIGATION EXPENSES
If you are a Class Member, you can tell the Courts that you do not agree with the Settlement, or
some part of it, the proposed Plan of Allocation, and/or any of the applications for attorneys’
fees and reimbursement of litigation expenses.
18. How do I tell the Courts that I do not like the Settlement, the proposed
Plan of Allocation, and/or the applications for attorneys’ fees and
reimbursement of litigation expenses?
17
Any Class Member, no matter where he, she or it resides, can object to the Settlement, or any of
its terms, to the proposed Plan of Allocation, and/or to any of the applications by plaintiffs’
counsel for awards of fees and expenses. You may write to the Claims Administrator setting out
your objection. You may give reasons why you think the Settlement terms or arrangements, the
proposed Plan of Allocation, and/or any of the applications for attorneys’ fees or expenses, should
not be approved by the Courts addressing those matters. The Claims Administrator will provide
copies of your objections to each of the Courts and to counsel for all the parties. The Courts
will consider your views if you provide your objection to the Claims Administrator within the
deadline identified and you are a member of the class certified by the court. However, it is in
the discretion of each of the Courts whether to consider the objections filed by members of the
other classes not certified by that Court.
Although it is up to each Court whether to hear the oral objections of persons who are members of
other classes not certified by that Court, if you are a member of one or more of the classes
described herein, and you wish to present your views in person or through a lawyer to a particular
Court, you should follow the procedures for submitting objections set forth in this response, and
in the response to question 22 below.
To object to the Settlement, the proposed Plan of Allocation, and/or any of the applications for
attorneys’ fees and expenses in these Nortel II Actions, you should send a signed letter stating
that you object to the Settlement, the proposed Plan of Allocation, and/or the applications by one
or more of plaintiffs’ counsel for awards of attorneys’ fees and expenses in the In re Nortel II
Securities Litigation. Be sure to include your name, address, telephone number, and your
signature, identify the date(s), price(s), and number(s) of shares of all purchases and sales of
Nortel common stock and/or Nortel common stock options you made during the period April 24, 2003
through April 27, 2004, inclusive, and state the reasons why you object to the Settlement, the
proposed Plan of Allocation, and/or any or all of the applications by plaintiffs’ counsel for
awards of attorneys’ fees and expenses. Your objection must be must be mailed to the Claims
Administrator at the following address, on or before , 2006:
Nortel II Securities Litigation Objections
c/o The Garden City Group, Inc., Claims Administrator
P.O. Box
, ___
You do not need to go to any of the Settlement Fairness Hearings to have your written objection
considered by the appropriate Court(s). At the Settlement Fairness Hearings, any Class Member who
has not previously submitted a request for exclusion from the Class and who has complied with the
procedures set out in this response and the response to question 22 below for filing with the
Court(s) and providing to the counsel for plaintiffs and defendants a statement of an intention to
appear at the Settlement Fairness Hearing(s) may also appear and be heard, to the extent allowed by
the applicable Court(s), to state any objection to the Settlement, the Plan of Allocation or
plaintiffs’ counsel’s motions for awards of legal fees and reimbursement of expenses. Any such
objector so appearing may appear in person or arrange, at that objector’s expense, for a lawyer to
represent the objector at the Hearing(s).
18
Any Class Member who does not object to the Settlement, the Plan of Allocation, and/or any
application for an award of attorneys’ fees and reimbursement of litigation expenses in the manner
prescribed above shall be deemed to have waived such objection and shall forever be foreclosed from
making any objection to the fairness, adequacy or reasonableness of the proposed Settlement, the
Order and Final Judgment to be entered approving the Settlement, the Plan of Allocation or the
applications for awards of attorneys’ fees and reimbursement of expenses.
19. What is the difference between objecting and excluding?
Objecting is simply telling the Court that you do not like something about the proposed Settlement.
You can object only if you stay in the Class. Excluding yourself is telling the Court that you do
not want to be part of the Class. If you exclude yourself, you have no basis to object because the
case no longer affects you.
THE SETTLEMENT FAIRNESS HEARINGS
The Courts will hold hearings to decide whether to approve the proposed Settlement. You may attend
and you may ask to speak, but you do not have to.
20. When and where will the Courts decide whether to approve the proposed Settlement?
The Courts will hold Settlement Fairness/Approval Hearings as follows:
|
• |
|
in the U.S. Action: at : ___.m. on
day,
, 2006, at the United States
District Court for the Southern District of New York, Daniel Patrick Moynihan United States
Courthouse, 500 Pearl Street, New York, NY. |
|
|
• |
|
in the Ontario National Action: at : ___.m. on day,
, 2006, at the
Ontario Superior Court of Justice, 361 University Avenue, Toronto, Ontario. |
|
|
• |
|
in the Quebec Action: at
: ___.m. on day,
, 2006, at the Superior
Court of Quebec, District of Montreal, 1 Notre-Dame East, Montreal, Quebec. |
At these hearings, each Court will consider whether the Settlement is fair and reasonable and
satisfies the legal requirements in each jurisdiction. At the Settlement Fairness Hearings, each
Court also will consider the proposed Plan of Allocation for the proceeds of the Settlement. In
addition, the U.S. Court will consider the fee and expense application by plaintiffs’ counsel in
the U.S. Action, and the respective Canadian Courts will consider the fee and expense applications
by plaintiffs’ counsel in the Canadian Actions. The Courts will take into consideration any
written objections filed in accordance with the instructions shown at question 18. The Courts also
may listen to people who have properly indicated, within the deadline identified above, an
intention to speak at the hearing(s); however, decisions regarding the conduct of the hearing(s)
will be made by the appropriate Court. See response to question 22 for
19
more information about speaking at the hearing(s). After each hearing, each Court will decide
whether to approve the Settlement. If the Courts approve the Settlement, each Court may also
decide how much to pay to plaintiffs’ counsel appearing in the Nortel I or Nortel II Action before
it. Only the U.S. Court will decide the amount of fees and expenses to be awarded to plaintiffs’
counsel in the U.S. Action, and only the respective Canadian Courts will decide the amount of fees
and expenses to be awarded to plaintiffs’ counsel in the Canadian Actions. It is not known how
long these decisions will take.
You should be aware that any of the Courts may change the date(s) and time(s) of the Settlement
Fairness Hearings. Thus, if you want to come to any of the hearings, you should check with
plaintiffs’ counsel before coming, to be sure that the date(s) and/or time(s) have not changed.
21. Do I have to come to any of the Settlement Fairness Hearings?
No. Plaintiffs’ counsel will answer questions any of the Courts may have. However, you are welcome
to come at your own expense. If you send an objection, you do not have to come to Court to talk
about it. As long as you filed your written objection on time, the Court(s) will consider it. You
may also pay your own lawyer to attend, but it is not necessary. Class Members do not need to
appear at any hearing or take any other action to indicate their approval.
22. May I speak at the Settlement Fairness Hearings?
If you object to the Settlement, the Plan of Allocation and/or the application(s) by any counsel
for an award of attorneys’ fees and expenses, you may ask the appropriate Court for permission to
speak at the Settlement Fairness Hearing(s). To do so, you must include with your objection (see
question 18 above) a statement stating that it is your “Notice of Intention to Appear” in the
appropriate Nortel II Action. Persons who intend to object to the Settlement, the Plan of
Allocation, and/or plaintiffs’ counsel’s applications for awards of legal fees and reimbursement of
expenses and desire to present evidence at the Settlement Fairness Hearing(s) must include in their
written objections the identity of any witnesses they may call to testify and exhibits they intend
to introduce into evidence at the Settlement Fairness Hearing(s). You may not be entitled to speak
at the Settlement Fairness Hearing(s) if you excluded yourself from the Class, if you are not a
member of the class in which the Court is holding the Settlement Fairness Hearing, or if you have
not provided written notice of your intention to speak at the Settlement Fairness Hearing(s) by the
deadline identified and in accordance with the procedures described in response to question 18 and
this response.
20
IF YOU DO NOTHING
23. What happens if I do nothing at all?
If you do nothing, you will get no money or shares from this Settlement, and you will be precluded
from starting a lawsuit, continuing with a lawsuit, or being part of any other lawsuit against
Nortel and the other Released Parties about the Settled Claims, ever again. To share in the Net
Settlement Fund you must submit a Proof of Claim form (see question 10). To start, continue or be
a part of any other lawsuit against Nortel and the other Released Parties about the Settled Claims
you must have properly excluded yourself from the Class in accordance with the procedures set forth
in this Notice (see questions 13 — 15).
GETTING MORE INFORMATION
24. Are there more details about the proposed Settlement?
This Notice summarizes the proposed Settlement. More details are set forth in a Stipulation and
Agreement of Settlement dated , 2006 (the “Stipulation”). You can get a copy of the
Stipulation by writing to appropriate Class Counsel, as set forth in “Further Information,” above,
by visiting [www. .com], or by contacting the Claims Administrator at:
Nortel II Securities Litigation Settlement
c/o The Garden City Group, Inc., Claims Administrator
P.O. Box 0000
City, ST 00000-0000
1-800-____- toll free
[www. .com]
where you will find answers to common questions about the Settlement, a Proof of Claim form, plus
other information to help you determine whether you are a Class Member and whether you are eligible
for a payment.
25. How do I get more information?
For even more detailed information concerning the matters involved in this Nortel II Action,
reference is made to the pleadings, to the Stipulation and Settlement Agreements, to the Orders
entered by the respective Courts and to the other papers filed in the Nortel II Actions, which may
be inspected, during regular business hours, as follows:
|
• |
|
In the U.S. Action: at the Office of the Clerk, United States District Court for the
Southern District of New York, Daniel Patrick Moynihan United States Courthouse, 500 Pearl
Street, New York, NY. |
|
|
• |
|
In the Ontario National Action: at the Civil Court Office, Ontario Superior Court of
Justice, 393 University Avenue, 10th Floor, Toronto, Ontario. |
|
|
• |
|
In the Quebec Action: at the Office of the Special Clerk, Superior Court of Quebec, 1
Notre-Dame East, Montreal, Quebec. |
21
PLAN OF ALLOCATION OF SETTLEMENT PROCEEDS
AMONG CLASS MEMBERS
The $370,157,418 Cash Settlement Amount plus any Contingent Recovery, and the interest earned
thereon, and the 314,333,875 Settlement Shares of Nortel common stock shall be the Gross Settlement
Fund. The Gross Settlement Fund, less all taxes, approved costs, fees and expenses (the “Net
Settlement Fund”) shall be distributed to members of the Class who submit acceptable Proofs of
Claim (“Authorized Claimants”).
The Claims Administrator shall determine each Authorized Claimant’s pro rata share of the cash and
Settlement Shares in the Net Settlement Fund based upon each Authorized Claimant’s “Recognized
Claim.” The Recognized Claim formula is not intended to be an estimate of the amount of what a
Class Member might have been able to recover after a trial; nor is it an estimate of the amount
that will be paid to Authorized Claimants pursuant to the Settlement. The Recognized Claim formula
is the basis upon which the Net Settlement Fund will be proportionately allocated to the Authorized
Claimants.
The proposed Plan of Allocation generally measures the amount of loss that a Class Member can claim
under the Settlement for the purpose of making pro-rata allocations of the cash and Settlement
Shares in the Net Settlement Fund to Class Members who submit acceptable Proofs of Claim. The
following proposed Plan of Allocation reflects plaintiffs’ allegations that the price of Nortel
common stock was inflated artificially during the Class Period due to misrepresentations regarding
Nortel’s revenue and earnings. On March 10, 2004, after the market close, Nortel issued a press
release announcing that it was delaying the filing of its 2003 Form 10-K and might restate its
results for 2003. On March 15, 2004, before the market opened, Nortel announced that it had placed
its CFO and controller on paid leave, and replaced them with interim appointments, effective
immediately. On April 28, 2004, before the market opened, Nortel announced that it would restate
and revise 2003 and prior-year financial results, and would delay the release of its first-quarter
results. It further stated that it expected reductions of about 50% of 2003 earnings and that its
CFO and controller, who had been appointed on a temporary basis, had been made permanent, and the
former CFO and controller “have been terminated for cause.” The reaction to each of these
announcements in the marketplace was swift. Nortel’s stock price declined from its $6.88 closing
price on March 10, 2004 on the New York Stock Exchange to a closing price of $6.37 per share on
March 11, 2004 – a decline of 7%. Nortel’s stock again declined from a closing price of $6.43 on
March 12, 2004 to a closing price of $5.24 on March 15, 2004 – a decline of 19%. Another decline
accompanied Nortel’s third disclosure, with Nortel’s stock plunging 28% from a closing price of
$5.64 on April 27, 2004 to a closing price of $4.05 on April 28, 2004. Plaintiffs estimated that a
total of approximately $2.90 per share, or 42%, of the $6.88 closing price on March 10, 2004
represented the artificial inflation caused by the Defendants’ alleged misrepresentations. (Note:
Nortel’s common stock price did not bounce back above a $4.05 average price in the 90-day period
following the end of the Class Period; accordingly, no reduction of the claimed damages is required
under the (United States) Private Securities Litigation Reform Act.)
An Authorized Claimant’s “Recognized Claim” will be calculated for purposes of the Settlement as
follows:
22
To the extent a claimant had a gain from his, her or its overall transactions in Nortel common
stock and/or Nortel put and call options during the Class Period, the value of the Recognized Claim
will be zero. Such claimants will in any event be bound by the Settlement. You may wish to
consider this when deciding to opt out.
Common Stock Purchases
1. |
|
For shares of Nortel common stock purchased between April 24, 2003 and March 10, 2004,
inclusive, and: |
|
a. |
|
sold at a loss prior to March 11, 2004, the Recognized Claim is the lesser of (x)
$0.29 per share, which is 10%2 of the inflation at the time of purchase
($2.90 per share), or (y) 10% of the difference between the purchase price and the
sales price. |
|
|
b. |
|
sold at a loss between March 11, 2004 and March 12, 2004, the Recognized Claim is
the lesser of: (i) the purchase price minus the sales price; or (ii) $0.44 per share. |
|
|
c. |
|
sold at a loss between March 15, 2004 and April 27, 2004, the Recognized Claim is
the lesser of: (i) the purchase price minus the sales price; or (ii) $1.48 per share. |
|
|
d. |
|
held as of the close of business on April 27, 2004, the Recognized Claim is the
lesser of: (i) the purchase price minus $4.05; or (ii) $2.90 per share. |
2. |
|
For shares of Nortel common stock purchased between March 11, 2004 and March 12, 2004,
inclusive, and: |
|
a. |
|
sold at a loss prior to March 15, 2004, the Recognized Claim is the lesser of (x)
$0.25, which is 10%3 of the inflation at the time of purchase ($2.46 per
share), and (y) 10% of the difference between the purchase price and the sales price. |
|
|
b. |
|
sold at a loss between March 15, 2004 and April 27, 2004, the Recognized Claim is
the lesser of: (i) the purchase price minus the sales price; or (ii) $1.04 per share. |
|
|
c. |
|
held as of the close of business on April 27, 2004, the Recognized Claim is the
lesser of: (i) the purchase price minus $4.05; or (ii) $2.46 per share. |
3. |
|
For shares of Nortel common stock purchased between March 15, 2004 and April 27, 2004,
inclusive, and: |
|
|
|
2 |
|
Class members who sold Nortel common stock at
a loss prior to the close of trading on March 10, 2004 before the disclosures
made on March 11, 2004 would face a potential defense that their loss was not
related to the alleged misrepresentations because the same alleged
misrepresentations affected both their purchase and their sale. The discount
to 10% reflects this greater difficulty. |
|
3 |
|
Class members who purchased Nortel common
stock on March 11 and 12, 2004 and who sold those shares of Nortel common stock
at a loss prior to the close of trading on March 12, 2004 (before the
disclosures made on March 15, 2004) would face a potential defense that their
loss was not related to the alleged misrepresentations because the same alleged
misrepresentations affected both their purchase and their sale. The discount
to 10% reflects this greater difficulty. |
23
|
a. |
|
sold at a loss between March 15, 2004 and April 27, 2004, the Recognized Claim is
the lesser of (x) $0.14, which is 10%3 of the inflation at the time of
purchase ($1.42 per share), or (y) 10% of the difference between the purchase price and
the sales price. |
|
|
b. |
|
held as of the close of business on April 27, 2004, the Recognized Claim is the
lesser of: (i) the purchase price minus $4.05; or $1.42 per share. |
Put and Call Options
The total recovery payable to Authorized Claimants from transactions in call or put options shall
not exceed five percent (5%) of the Net Settlement Fund.
Call Option Purchases
1. |
|
For call options purchased between April 24, 2003 and March 10, 2004: |
|
a. |
|
No claim will be recognized for any Nortel call options purchased between April 24,
2003 and March 10, 2004 that were not owned as of the close of trading on March 10,
2004. |
|
|
b. |
|
For call options purchased between April 24, 2003 and March 10, 2004 and owned as
of the close of trading on March 10, 2004, an Authorized Claimant’s Recognized Claim
shall be the lesser of (a) 50% of the difference, if a loss, between (x) the amount
paid for the call options (including brokerage commissions and transaction charges) and
(y) the sum for which said call options were subsequently sold at a loss (after
brokerage commissions and transaction charges (or $0.00 if the call option expired
while still owned by the Authorized Claimant), or (b) $1.45 per share covered by such
call options (i.e., 50% of the $2.90 maximum per common share claim for this loss). |
|
|
c. |
|
No loss shall be recognized based on a sale or writing of any call option that was
subsequently repurchased. |
|
|
d. |
|
Shares of Nortel acquired during the Class Period through the exercise of a call
option shall be treated as a purchase on the date of exercise for the exercise price
plus the cost of the call option, and any Recognized Claim arising from such
transaction shall be computed as provided for other purchases of common stock. |
1. |
|
For call options purchased between March 11, 2004 and March 12, 2004: |
|
|
|
4 |
|
Class members who purchased Nortel common
stock between March 15, 2004 and April 27, 2004 and who sold those shares of
Nortel common stock at a loss prior to the close of trading on April 27, 2004
(before the disclosures made on April 27, 2004) would face a potential defense
that their loss was not related to the alleged misrepresentations because the
same alleged misrepresentations affected both their purchase and their sale.
The discount to 10% reflects this greater difficulty. |
24
|
a. |
|
No claim will be recognized for any Nortel call options purchased between March 11,
2004 and March 12, 2004 that were not owned as of the closed of trading on March 12,
2004. |
|
|
b. |
|
For Nortel call options purchased between March 11, 2004 and March 12, 2004 and
owned as of the close of trading on March 12, 2004, an Authorized Claimant’s Recognized
Claim shall be the lesser of (a) 50% of the difference, if a loss, between (x) the
amount paid for the call options (including brokerage commissions and transaction
charges) and (y) the sum for which said call options were subsequently sold at a loss
(after brokerage commissions and transaction charges (or $0.00 if the call option
expired while still owned by the Authorized Claimant), or (b) $1.23 per share covered
by such call options (i.e., 50% of the $2.46 maximum per common share claim for this
loss). |
|
|
c. |
|
No loss shall be recognized based on a sale or writing of any call option that was
subsequently repurchased. |
|
|
d. |
|
Shares of Nortel acquired during the Class Period through the exercise of a call
option shall be treated as a purchase on the date of exercise for the exercise price
plus the cost of the call option, and any Recognized Claim arising from such
transaction shall be computed as provided for other purchases of common stock. |
2. |
|
For call options purchased between March 15, 2004 and April 27, 2004: |
|
a. |
|
No claim will be recognized for any Nortel call options purchased between March 15,
2004 and April 27, 2004 that were not owned as of the closed of trading on April 27,
2004. |
|
|
b. |
|
For Nortel call options purchased between March 15, 2004 and April 27, 2004 and
owned as of the close of trading on April 27, 2004, an Authorized Claimant’s Recognized
Claim shall be the lesser of (a) 50% of the difference, if a loss, between (x) the
amount paid for the call options (including brokerage commissions and transaction
charges) and (y) the sum for which said call options were subsequently sold at a loss
(after brokerage commissions and transaction charges (or $0.00 if the call option
expired while still owned by the Authorized Claimant), or (b) $0.71 per share covered
by such call options (i.e., 50% of the $1.42 maximum per common share claim for this
loss). |
|
|
c. |
|
No loss shall be recognized based on a sale or writing of any call option that was
subsequently repurchased. |
|
|
d. |
|
Shares of Nortel acquired during the Class Period through the exercise of a call
option shall be treated as a purchase on the date of exercise for the exercise price
plus the cost of the call option, and any Recognized Claim arising from such
transaction shall be computed as provided for other purchases of common stock. |
25
Put Option Sales
For Nortel put options sold (written) during the Class Period that expired unexercised, an
Authorized Claimant’s Recognized Claim shall be $0.00.
1. |
|
For put options sold (written) between April 24, 2003 and March 10, 2004: |
|
a. |
|
No claim will be recognized for Nortel put options sold (written) between April 24,
2003 and March 10, 2004 which were not the obligation of the Authorized Claimant as of
the close of trading on March 10, 2004. |
|
|
b. |
|
For Nortel put options sold (written) between April 24, 2003 and March 10, 2004
that were the obligation of the Authorized Claimant at the close of trading on March
10, 2004, an Authorized Claimant’s Recognized Claim shall be the lesser of (a) the
difference, if a loss, between (x) the amount received for writing the put option (net
of brokerage commissions and transaction charges) and (y) the sum for which said put
options were repurchased at a loss after the close of trading on March 10, 2004
(including brokerage commissions and transaction charges) or (b) $2.90 per share
covered by such put options. |
|
|
c. |
|
For Nortel put options written between April 24, 2003 and March 10, 2004 that were
“put” to the Authorized Claimant (i.e., exercised), the Authorized Claimant’s
Recognized Claim shall be calculated as a purchase of common stock as shown above, and
as if the sale of the put option were instead a purchase of Nortel common stock on the
date of the sale of the put option, and the “purchase price paid” shall be the strike
price less the proceeds received on the sale of the put option. |
|
|
d. |
|
No loss shall be recognized based on a sale of any put option that was previously
purchased. |
2. |
|
For put options sold (written) between March 11, 2004 and March 12, 2004: |
|
a. |
|
No claim will be recognized for any Nortel put options sold (written) between March
11, 2004 and March 12, 2004 that were not the obligation of the claimant as of the
close of trading on March 12, 2004. |
|
|
b. |
|
For Nortel put options sold (written) between March 11, 2004 and March 12, 2004
that were the obligation of the Authorized Claimant at the close of trading on March
12, 2004, an Authorized Claimant’s Recognized Claim shall be the lesser of (a) the
difference, if a loss, between (x) the amount received for writing the put option (net
of brokerage commissions and transaction charges) and (y) the sum for which said put
option was repurchased at a loss after the close of trading on March 12, 2004
(including brokerage commissions and transaction charges) or (b) $2.46 per share
covered by such put option. |
|
|
c. |
|
For Nortel put options written between April 24, 2003 and March 10, 2004 that were
“put” to the Authorized Claimant (i.e., exercised), the Authorized Claimant’s
Recognized Claim shall be calculated as a purchase of common stock as shown |
26
|
|
|
above, and as if the sale of the put option were instead a purchase of Nortel common
stock on the date of the sale of the put option, and the “purchase price paid” shall be
the strike price less the proceeds received on the sale of the put option. |
|
|
d. |
|
No loss shall be recognized based on a sale of any put option that was previously
purchased. |
3. |
|
For put options sold (written) between March 15, 2004 and April 27, 2004: |
|
a. |
|
No claim will be recognized for any Nortel put option sold (written) between March
15, 2004 and April 27, 2004 that was not the obligation of the claimant as of the close
of trading on April 27, 2004. |
|
|
b. |
|
For Nortel put options sold (written) between March 15, 2004 and April 27, 2004
that were the obligation of the Authorized Claimant at the close of trading on April
27, 2004, an Authorized Claimant’s Recognized Claim shall be the lesser of (a) the
difference, if a loss, between (x) the amount received for writing the put option (net
of brokerage commissions and transaction charges) and (y) the sum for which said put
options were repurchased at a loss after the close of trading on April 27, 2004
(including brokerage commissions and transaction charges) or (b) $1.42 per share
covered by such put options. |
|
|
c. |
|
For Nortel put options written between March 15, 2004 and April 27, 2004 that were
“put” to the Authorized Claimant (i.e., exercised), the Authorized Claimant’s
Recognized Claim shall be calculated as a purchase of common stock as shown above, and
as if the sale of the put option were instead a purchase of Nortel common stock on the
date of the sale of the put option, and the “purchase price paid” shall be the strike
price less the proceeds received on the sale of the put option. |
|
|
d. |
|
No loss shall be recognized based on a sale of any put option that was previously
purchased. |
In the event a Class Member has more than one purchase or sale of Nortel common stock and/or Nortel
common stock options, all purchases and sales shall be matched on a First In First Out (“FIFO”)
basis, Class Period sales will be matched first against any Nortel shares and/or options held at
the beginning of the Class Period, and then against purchases in chronological order, beginning
with the earliest purchase made during the Class Period. Purchases and sales of Nortel common
stock and options shall be deemed to have occurred on the “contract” or “trade” date as opposed to
the “settlement” or “payment” date. The receipt or grant by gift, devise or operation of law of
Nortel common stock and/or options during the Class Period shall not be deemed a purchase or sale
of these Nortel securities for the calculation of an Authorized Claimant’s Recognized Claim nor
shall it be deemed an assignment of any claim relating to the purchase of such Nortel securities
unless specifically provided in the instrument of gift or assignment. The receipt of Nortel common
stock during the Class Period in exchange for securities of any other corporation or entity shall
not be deemed a purchase or sale of Nortel common stock.
Each Authorized Claimant shall be allocated pro rata shares of the cash and Settlement Shares in
the Net Settlement Fund based on his, her or its Recognized Claim as compared to the total
27
Recognized Claims of all Authorized Claimants. Each Authorized Claimant shall be paid an amount
determined by multiplying the total cash or Settlement Shares, respectively, in the Net Settlement
Fund, by a fraction the numerator of which shall be his, her or its “Recognized Claim” and the
denominator of which shall be the Total Recognized Claims of all Authorized Claimants. This
computation weighs each Class Member’s claim against every other Class Member’s claim. Each
Authorized Claimant will receive pro rata shares of the cash and Settlement Shares in the Net
Settlement Fund based on his, her or its Recognized Claim.
The amount of a Class Member’s Recognized Claim as computed above is not intended to be an estimate
of what a Class Member might have been able to recover at trial, and it is not an estimate of the
amount that will be paid pursuant to this Settlement. Instead, this computation is only a method
to weight Class Members’ claims against one another. Each Authorized Claimant will receive pro
rata shares of the cash and Settlement Shares in the Net Settlement Fund based on his, her or its
Recognized Claim.
To the extent a Claimant had a gain from his, her or its overall transactions in Nortel common
stock and/or Nortel put and call options during the Class Period, the value of the Recognized Claim
will be zero. Such claimants will in any event be bound by the Settlement. To the extent that a
Claimant suffered an overall loss on his, her or its overall transactions in Nortel common stock
and/or options during the Class Period, but that loss was less than the Recognized Claim calculated
above, then the Recognized Claim shall be limited to the amount of the actual loss.
For purposes of determining whether a Claimant had a gain from his, her or its overall transactions
in Nortel common stock during the Class Period or suffered a loss, the Claims Administrator shall:
(i) total the amount the Claimant paid for all Nortel common stock and Nortel options purchased
during the Class Period, and the cost or amount paid to repurchase or close after the Class Period
any Nortel put options written by the Claimant during the Class Period that were open obligations
of the Claimant at the end of the Class Period (the “Total Purchase Amount”); (ii) match any sales
of Nortel common stock or options during the Class Period first against the Claimant’s opening
position in the stock (the proceeds of those sales will not be considered for purposes of
calculating gains or losses); (iii) total the amount received for sales of the remaining shares of
Nortel common stock and any options sold during the Class Period (the “Sales Proceeds”); and (iv)
ascribe a $4.05 per share holding value for the number of shares of Nortel common stock purchased
during the Class Period and still held at the end of the Class Period and add the value at the end
of Class period of any call options still held by the Claimant at the end of the Class Period
(“Holding Value”). The difference between (x) the Total Purchase Amount ((i) above) and (y) the
sum of the Sales Proceeds ((iii) above) and the Holding Value ((iv) above) will be deemed a
Claimant’s gain or loss on his, her or its overall transactions in Nortel common stock during the
Class Period.
Class Members who do not submit acceptable Proofs of Claim will not share in the settlement
proceeds. Class Members who do not either submit a request for exclusion or submit an acceptable
Proof of Claim will nevertheless be bound by the Settlement and the Judgment of the Court
dismissing the Nortel II Actions.
Distributions will be made to Authorized Claimants after all claims have been processed and after
the Courts have finally approved the Settlement. If any funds remain in the Net Settlement
28
Fund by reason of un-cashed distributions or otherwise, then, after the Claims Administrator has
made reasonable and diligent efforts to have Class Members who are entitled to participate in the
distribution of the Net Settlement Fund cash their distributions, any balance remaining in the Net
Settlement Fund one (1) year after the initial distribution of such funds shall be re-distributed
to Class Members who have cashed their initial distributions and who would receive at least $10.00
from such re-distribution, after payment of any unpaid costs or fees incurred in administering the
Net Settlement Fund for such re-distribution. If after six months after such re-distribution any
funds shall remain in the Net Settlement Fund, then such balance shall be contributed
proportionally to United States and Canadian non-sectarian, not-for-profit organizations designated
by plaintiffs’ counsel (and in the case of any relevant settlement shares, by transfer of such
shares to such organization) after notice to the. Courts and subject to direction, if any, by the
Courts.
Plaintiffs, defendants, their respective counsel, and all other Released Parties shall have no
responsibility for or liability whatsoever for the investment or distribution of the Settlement
Fund, the Net Settlement Fund, the Plan of Allocation or the determination, administration,
calculation, or payment of any Proof of Claim or non-performance of the Claims Administrator, the
payment or withholding of taxes owed by the Settlement Fund, or any losses incurred in connection
therewith.
Any payment required to be made to the Fonds d’aide aux recours collectifs of Quebec shall be paid
by the Claims Administrator from the funds allocable to such members of the Quebec Class.
SPECIAL NOTICE TO SECURITIES BROKERS AND OTHER NOMINEES
If you purchased Nortel common stock or call options on Nortel common stock, or wrote (sold) put
options on Nortel common stock during the period between April 24, 2003 through April 27, 2004,
inclusive for the beneficial interest of a person or organization other than yourself, the United
States District Court has directed that, WITHIN SEVEN (7) DAYS OF YOUR RECEIPT OF THIS NOTICE, you
either (a) provide to the Claims Administrator the name and last known address of each person or
organization for whom or which you purchased or sold such stock and/or options during such time
period or (b) request additional copies of this Notice and the Proof of Claim form, which will be
provided to you free of charge, and within seven (7) days mail the Notice and Proof of Claim form
directly to the beneficial owners of such stock and/or options. If you choose to follow
alternative procedure (b), the Court has directed that, upon such mailing, you send a statement to
the Claims Administrator confirming that the mailing was made as directed. You are entitled to
reimbursement from the Gross Settlement Fund of your reasonable expenses actually incurred in
connection with the foregoing, including reimbursement of postage expense and the cost of
ascertaining the names and addresses of beneficial owners. Those expenses will be paid upon
request and submission of appropriate supporting documentation. All communications concerning the
foregoing should be addressed to the Claims Administrator:
Nortel II Securities Litigation Settlement
c/o The Garden City Group, Inc., Claims Administrator
P.O. Box
, __
(800) ____-
Dated: , 2006
29
APPENDIX “A”
NORTEL: CORPORATE GOVERNANCE PROVISIONS
Corporate Governance Enhancements
A. The following are the corporate governance enhancements that Nortel Networks Corporation
(“Nortel”) has agreed to implement:
1) Nortel will amend its Statement of Governance Guidelines (the “Governance Statement”) to
explicitly provide that the non-executive Chair (the “Chair”) of Nortel’s Board of Directors (the
“Board”) shall have adequate support staff to carry out the Chair’s responsibilities.
2) Nortel will amend its Governance Statement and the mandates of the Board and the Board
committees to explicitly provide for in camera or executive sessions at every Board and Board
committee meeting, whether such meetings are conducted in-person or telephonically.
3) The Board will adopt a formal policy in 2006 to provide guidance to directors on the number
of outside public boards on which a director may serve. The Board may take into account various
factors in making its determination, including number of meetings and work plan of additional
boards, committee memberships, industry and geographic location.
4) Nortel will amend the fourth page, first non-indented paragraph, first sentence of the
current mandate of Nortel’s Compensation and Human Resources Committee (formerly the Joint
Leadership Resources Committee, the “CHRC”) to read:
Subject as hereinafter provided, the committee shall have sole authority over the engagement
of compensation consultants, including over the terms and conditions of such engagements.
5) Nortel will disclose in its annual proxy circular and proxy statement the names of
comparator companies used for purpose of pay setting and performance comparisons.
6) The CHRC will include the results of comparator companies in determining its compensation
practices and philosophy in consultation with the independent compensation consultants to the CHRC.
7) The CHRC intends to establish its. compensation structures and policies in line with best
practices. The CHRC will consult with its independent compensation consultants regularly to review
the current state of affairs on best practices in the various areas of executive and other employee
compensation, including with respect to the relative balance between annual and long-term
compensation.
30
8) The CHRC will not utilize pro forma or adjusted financial metrics to assess performance and
pay incentives except in extraordinary circumstances, and in consultation with the independent
compensation consultants to the CHRC and Nortel’s Audit Committee.
9) The CHRC will disclose in Nortel’s annual proxy circular and proxy statement pay for
performance measures and the time period(s) used to assess management’s performance, except that
confidential or competitive information will not be disclosed.
10) The CHRC will require that all executives’ employment agreements include a clawback
provision that entitles the company to take back compensation, or declare compensation not owed, in
the case of fraud.
11) Nortel will amend the mandate of the Board to formalize the Board’s current practice of
electing the Chair on an annual basis.
12) Nortel will require that all committees of the Board must meet at least once a year.
13) Any material deviation from Nortel’s Governance Statement will be disclosed in the Report
on Governance in the annual proxy circular and proxy statement.
B. The following are either current practices of Nortel or practices that Nortel was in the process
of adopting at the time that negotiations with Lead Plaintiffs as to corporate governance
enhancements began, and which Lead Plaintiffs have demanded be memorialized as part of this
Settlement, and which Nortel has either implemented or has agreed to implement:
1) Commencing with 2006, Nortel will prepare a forward agenda for the Board, as well as each
committee of the Board, at the beginning of each fiscal year. Each forward agenda will identify
the decisions and actions to be presented to the Board or committee for the ensuing year as
prescribed by the mandate of the Board or of the applicable committee.
2) Nortel currently conducts an annual assessment of the Board, its committees, individual
directors and the Chair and reports those results to the Board. Nortel will describe this review
process in its annual proxy circular and proxy statement.
3) Nortel’s Nominating and Governance Committee (formerly the Committee on Directors, the
“Committee”) will adopt, each year, general procedures which the Committee will follow for the
purpose of identifying Board candidates. These procedures will be sufficiently flexible to permit
the Committee to respond to current circumstances as well as to the requirements of the Canada
Business Corporations Act, the stock exchanges and applicable securities laws regarding the
election and appointment of directors. These procedures will be adopted for candidate
identification and the appointment of new directors to the Board.
31
4) Nortel is in the process of amending the Committee’s mandate to explicitly identify that
the Committee is responsible for director succession planning.
5) Nortel is in the process of formalizing and expanding its director orientation and
education program.
6) The CHRC generally will not grant enhanced pension arrangements except in extraordinary
circumstances and in consultation with its independent compensation consultants.
7) The CHRC agrees with the policy of not layering incentive plans on top of other incentive
plans by reason of an unlikely payout under another existing plan.
C. Lead Plaintiffs are invited to address the chairman of Nortel’s Board and the Committee no later
than four months after the Effective Date with respect to certain additional governance proposals,
who will in turn discuss those proposals with the Board. The Board will then consider those
proposals in good faith and act accordingly.
32
EXHIBIT A-2
PROOF OF CLAIM AND RELEASE
This Proof of Claim and Release relates to the following actions (the “Nortel II Actions”):
• |
|
In Re Nortel Networks Corp. Securities Litigation, Master File No. 04 Civ. 21
15 (LAP) in the United States District Court for the Southern District of New
York; |
|
• |
|
Gallardi v. Nortel Networks Corporation, No. 05-CV-285606CP in the Ontario
Superior Court of Justice; and |
|
• |
|
Skarstedt v. Corporation Nortel Networks, No. 500-06-000277-059 in the
Superior Court of Quebec District of Montreal. |
DEADLINE FOR SUBMISSION: ___, 2006.
IF YOU PURCHASED NORTEL NETWORKS CORPORATION (“NORTEL”) COMMON STOCK OR CALL OPTIONS ON
NORTEL COMMON STOCK OR WROTE (SOLD) PUT OPTIONS ON NORTEL COMMON STOCK (“NORTEL SECURITIES”)
DURING THE PERIOD BETWEEN APRIL 24, 2003 THROUGH APRIL 27, 2004, INCLUSIVE (“CLASS PERIOD”),
YOU MAY BE A “CLASS MEMBER” ENTITLED TO SHARE IN THE PROCEEDS OF A SETTLEMENT.
NOTE: If you also purchased Nortel common stock or call options on Nortel common stock or
wrote (sold) put options on Nortel common stock during the period between October 24, 2000
through February 15, 2001, inclusive, then you should have also received another Notice and
you should also submit a separate Proof of Claim for those securities on the [COLOR] Proof
of Claim form relating to a separate class action covering that time period (copies of that
[COLOR] form are available from [Claims Administrator]. This [ANOTHER COLOR] Proof of Claim
should be submitted with respect to only your purchases during the April 24, 2003 through
April 27, 2004, inclusive, time period.
Excluded from the Class are (i) Nortel, Frank Dunn, Douglas C. Beatty, Michael J. Gollogly,
John E. Cleghorn, Robert E. Brown, Robert A. Ingram, Guylaine Saucier and
Sherwood H. Smith, Jr. (the “Defendants”); (ii) James Kinney (finance chief for Nortel’s
Wireless Networks Division, Richardson, Texas), Ken Taylor (Vice President for Nortel’s
Enterprise Networks Division, Raleigh, North Carolina), Craig Johnson (Finance Director for
Nortel’s Wireline Networks Division, Richardson, Texas), Doug Hamilton (Finance Director for
Nortel’s Optical Networks Group, Montreal, Quebec), Michael Gasnier (Vice President of
Finance for Europe), Robert Ferguson (Vice President of Finance for China), and William
Bowrey (Controller for Asia); (iii) members of the immediate family of each of the
defendants and/or any of the individuals referenced above; (iv) any entity in which any
defendant and/or any of the individuals referenced above has a controlling interest; (v) any
parent, subsidiary or affiliate of Nortel; (vi) any
person who was an officer or director or
Nortel or any of its subsidiaries or affiliates during the Class Period; and (vii) the legal
representatives, heirs, predecessors, successors or assigns of any of the excluded persons
or entities.
IF YOU ARE A CLASS MEMBER, YOU MUST COMPLETE AND SUBMIT THIS FORM IN ORDER TO BE ELIGIBLE
FOR ANY SETTLEMENT BENEFITS.
YOU MUST COMPLETE AND SIGN THIS PROOF OF CLAIM AND MAIL IT BY FIRST CLASS MAIL, POSTMARKED
NO LATER THAN ___, 2006 TO THE FOLLOWING ADDRESS:
In re Nortel II Securities Litigation
c/o [Claims Administrator]
Claims Administrator
Post Office Box ___
_________, ___ ___
YOUR FAILURE TO SUBMIT YOUR CLAIM BY ___, 2006 WILL SUBJECT YOUR CLAIM TO REJECTION
AND PRECLUDE YOUR RECEIVING ANY MONEY IN CONNECTION WITH THE SETTLEMENT OF THIS LITIGATION.
DO NOT MAIL OR DELIVER YOUR CLAIM TO THE COURTS OR TO ANY OF THE PARTIES OR THEIR COUNSEL AS
ANY SUCH CLAIM WILL BE DEEMED NOT TO HAVE BEEN SUBMITTED. SUBMIT YOUR CLAIM ONLY TO THE
CLAIMS ADMINISTRATOR.
2
CLAIMANT’S STATEMENT
1. I purchased Nortel Networks Corporation (“Nortel”) common stock and/or call options on
Nortel common stock and/or wrote (sold) put options on Nortel common stock during the period
between April 24, 2003 through April 27, 2004, inclusive. (Do not submit this Proof of Claim if you
did not purchase Nortel common stock or call options or write (sell) put options on Nortel common
stock during this period.)
2. By submitting this Proof of Claim, I state that I believe in good faith that I am a Class
Member as defined above and in the Notice of Pendency and Certifications of Class Actions and
Proposed Settlements, Motions for Attorneys’ Fees and Settlement Fairness Hearings (the “Notice”),
or am acting for such person; that I am not a defendant in any of the Actions or anyone excluded
from the Class; that I have read and understand the Notice; that I believe that I am entitled to
receive a share of the Net Settlement Fund as described in the Notice; that I elect to participate
in the proposed Settlement described in the Notice; and that I have not filed a request for
exclusion. (If you are acting in a representative capacity on behalf of a Class Member (e.g., as an
executor, administrator, trustee, or other representative), you must submit evidence of your
current authority to act on behalf of that Class Member. Such evidence would include, for example,
letters testamentary, letters of administration, or a copy of the trust documents.)
3. I consent to the jurisdiction of the Courts with respect to all questions concerning the
validity of this Proof of Claim. I understand and agree that my claim may be subject to
investigation and discovery under the applicable rules of civil procedure, provided that such
investigation and discovery shall be limited to my status as a Class Member and the validity and
amount of my claim. No discovery shall be allowed on the merits of the Actions or the Settlement in
connection with processing of the Proofs of Claim.
3
4. I have set forth where requested below all relevant information with respect to each of my
purchases and sales of Nortel common stock and/or call options and/or put options during the
periods indicated. I agree to furnish additional information (including transactions in other
Nortel securities) to the Claims Administrator, as required by it, to support this claim and my
entitlement to a distribution if requested to do so. I understand that my failure to comply with
this provision may result in a delay of my distribution, or the rejection of my claim.
5. I have enclosed photocopies of the stockbroker’s confirmation slips, stockbroker’s
statements, or other documents evidencing each purchase, sale or retention of Nortel common stock
or Nortel common stock options listed below in support of my claim. (IF ANY SUCH DOCUMENTS ARE NOT
IN YOUR POSSESSION, PLEASE OBTAIN A COPY OR EQUIVALENT DOCUMENTS FROM YOUR BROKER BECAUSE THESE
DOCUMENTS ARE NECESSARY TO PROVE AND PROCESS YOUR CLAIM.)
6. I understand that the information contained in this Proof of Claim is subject to such
verification as the Claims Administrator may request or as the Courts may direct, and 1 agree to
cooperate in any such verification. (The information requested herein is designed to provide the
minimum amount of information necessary to process most simple claims. The Claims Administrator may
request additional information as required to efficiently and reliably calculate your Recognized
Claim and any applicable withholding taxes. In some cases the Claims Administrator may condition
acceptance of the claim based upon the production of additional information, including, where
applicable, information concerning transactions in any derivatives of the subject securities such
as options.)
7. Upon the occurrence of the Effective Date (as described in the Notice), my signature hereto
will constitute a full and complete release, remise and discharge by me and my
4
heirs, executors, administrators, predecessors, successors, and assigns (or, if I am
submitting this Proof of Claim on behalf of a corporation, a partnership, estate or one or more
other persons, by it, him, her or them, and by its, his, her or their heirs, executors,
administrators, predecessors, successors, and assigns) of each of the “Released Parties” of all
“Settled Claims,” including “Unknown Claims”, as these terms are defined in the Notice.
8. NOTICE REGARDING ELECTRONIC FILES: Certain claimants with large numbers of transactions may
request, or may be requested, to submit information regarding their transactions in electronic
files. All Claimants MUST submit a manually signed paper Proof of Claim form listing all their
transactions whether or not they also submit electronic copies. If you wish to file your claim
electronically, you must contact the Claims Administrator at 1-(800)___-___or visit their website
at www.___.com to obtain the required file layout. No electronic files will be considered to
have been properly submitted unless the Claims Administrator issues to the Claimant a written
acknowledgment of receipt and acceptance of electronically submitted data.
9. Statement of Claim
Name(s) of Beneficial Owner(s):
Name
Joint Owner’s Name (if any)
Residence Address of Beneficial Owner(s):
Street No.
City State / Province Zip Code / Postal Code
5
Mailing Address of Beneficial Owner(s) (if different):
Street No.
City State / Province Zip Code / Postal Code
( ) ( )
Telephone No. (Day) Telephone No. (Night)
Check one:
Individual Corporation
Joint Owners IRA/RRSP
Estate Other
(specify)
Citizenship:
USA Canadian
Other
Place of residence at the time you purchased Nortel common stock or call options on Nortel
common stock or wrote (sold) put options on Nortel common stock:
State / Province Country
If the Place of residence indicated above is Quebec, and if you are a legal person
established for a private interest, a partnership or an association, indicate whether, at
any time during the 12-month period preceding February 18, 2005, more than 50 employees were
under your direction or control. /___/
FOR NORTEL COMMON STOCK:
10. At the close of business on April 23, 2003, I owned ___shares of Nortel common
stock (If none, write “0” or “Zero”) (must be documented if other than zero).
11. I made the following purchases of Nortel common stock during the period April 24, 2003
through April 27, 2004, inclusive. (Persons who received Nortel common stock during this period
other than by purchase are not eligible to submit claims for those transactions.):
6
|
|
|
|
|
|
|
|
|
|
|
|
|
Aggregate Cost |
Date(s) of Purchase |
|
Number of Shares of |
|
|
|
(including |
(List Chronologically) |
|
Common Stock |
|
Purchase Price Per Share |
|
commissions, taxes, |
(Month/Day/Year) |
|
Purchased |
|
of Common Stock |
|
and fees) |
___/___/___
|
|
|
|
$
|
|
$ |
___/___/___
|
|
|
|
$
|
|
$ |
___/___/___
|
|
|
|
$
|
|
$ |
___/___/___
|
|
|
|
$
|
|
$ |
___/___/___
|
|
|
|
$
|
|
$ |
12. I made the following sales of Nortel common stock during the period April 24, 2003
through April 27, 2004, inclusive:
|
|
|
|
|
|
|
Date(s) of Sale (List |
|
|
|
|
|
Amount Received (net |
Chronologically) |
|
Number of Shares of |
|
Sale Price Per Share |
|
of commissions, taxes, |
(Month/Day/Year) |
|
Common Stock Sold |
|
of Common Stock |
|
and fees) |
___/___/___
|
|
|
|
$
|
|
$ |
___/___/___
|
|
|
|
$
|
|
$ |
___/___/___
|
|
|
|
$
|
|
$ |
___/___/___
|
|
|
|
$
|
|
$ |
___/___/___
|
|
|
|
$
|
|
$ |
13. At the close of trading on April 27, 2004, I owned shares of Nortel common stock (If
none, write “0” or “Zero” ) (must be documented if other than zero).
FOR CALL OPTIONS ON NORTEL COMMON STOCK:
14. At the close of business on April 23, 2003,1 owned the following call options on Nortel
common stock (must be documented if other than zero.):
|
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|
|
Date Purchased |
|
|
|
|
|
|
|
|
(List |
|
|
|
|
|
|
|
|
Chronologically) |
|
|
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|
|
Expiration Date |
|
|
(Month/Day/Year) |
|
Number of Contracts |
|
Strike Price |
|
(Month/Day/Year) |
|
Aggregate Cost |
___/___/___
|
|
|
|
$
|
|
___/___/___ |
|
|
___/___/___
|
|
|
|
$
|
|
___/___/___ |
|
|
___/___/___
|
|
|
|
$
|
|
___/___/___ |
|
|
___/___/___
|
|
|
|
$
|
|
___/___/___ |
|
|
15. I made the following purchases of call options on Nortel common stock during the
period between April 24, 2003 through April 27, 2004, inclusive:
7
|
|
|
|
|
|
|
|
|
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|
|
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|
|
|
|
|
|
Aggregate Cost |
Date of Purchase |
|
|
|
|
|
|
|
|
|
(including |
(List Chronologically) |
|
Number of |
|
|
|
Expiration Date |
|
Price Paid |
|
commissions, |
(Month/Day/Year) |
|
Contracts |
|
Strike Price |
|
(Month/Day/Year) |
|
Per Share |
|
taxes, and fees) |
___/___/___
|
|
|
|
$
|
|
___/___/___
|
|
$
|
|
$ |
___/___/___
|
|
|
|
$
|
|
___/___/___
|
|
$
|
|
$ |
___/___/___
|
|
|
|
$
|
|
___/___/___
|
|
$
|
|
$ |
___/___/___
|
|
|
|
$
|
|
___/___/___
|
|
$
|
|
$ |
16. I made the following sales of call options on Nortel common stock during the period
April 24, 2003 through April 27, 2004, inclusive:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aggregate |
Date of Sale (List |
|
|
|
|
|
|
|
|
|
Received (net of |
Chronologically) |
|
Number of |
|
|
|
Expiration Date |
|
Sale Price |
|
commissions, |
(Month/Day/Year) |
|
Contracts |
|
Strike Price |
|
(Month/Day/Year) |
|
Per Share |
|
taxes, and fees) |
___/___/___
|
|
|
|
$
|
|
___/___/___
|
|
$
|
|
$ |
___/___/___
|
|
|
|
$
|
|
___/___/___
|
|
$
|
|
$ |
___/___/___
|
|
|
|
$
|
|
___/___/___
|
|
$
|
|
$ |
___/___/___
|
|
|
|
$
|
|
___/___/___
|
|
$
|
|
$ |
17. I exercised the following call options on Nortel common stock during the period
between April 24, 2003 through April 27, 2004, inclusive:
|
|
|
|
|
|
|
Date of Exercise |
|
|
|
Expiration Date |
|
|
(Month/Day/Year) |
|
Strike Price |
|
(Month/Day/Year) |
|
Number of Contracts |
___/___/___
|
|
$
|
|
___/___/
|
|
|
___/___/___
|
|
$
|
|
___/___/
|
|
|
___/___/___
|
|
$
|
|
___/___/
|
|
|
___/___/___
|
|
$
|
|
___/___/
|
|
|
18. At the close of business on April 27, 2004, I still owned the following call options
on Nortel common stock:
|
|
|
|
|
Number of Contracts |
|
Strike Price |
|
Expiration Date (Month/Day/Year) |
|
|
$
|
|
___/___/___ |
|
|
$
|
|
___/___/___ |
|
|
$
|
|
___/___/___ |
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$
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___/___/___ |
FOR PUT OPTIONS ON NORTEL COMMON STOCK:
19. At the close of business on April 23, 2003, I was obligated on the following put options
on Nortel common stock:
8
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Number of Contracts |
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Strike Price |
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Expiration Date (Month/Day/Year) |
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$
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___/___/___ |
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$
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___/___/___ |
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$
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___/___/___ |
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$
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___/___/___ |
20. I wrote (sold) put options on Nortel common stock during the period between April 24,
2003 through April 27, 2004, inclusive, as follows:
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Aggregate |
Date of Writing (Sale) |
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Received (net of |
(List Chronologically) |
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Number of |
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Expiration Date |
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Sale Price |
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commissions, |
(Month/Day/Year) |
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Contracts |
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Strike Price |
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(Month/Day/Year) |
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Per Share |
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taxes, and fees) |
___/___/___
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$
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___/___/___
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$
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$ |
___/___/___
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$
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___/___/___
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$
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$ |
___/___/___
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$
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___/___/___
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$
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$ |
___/___/___
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$
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___/___/___
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$
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$ |
21. I made the following re-purchases of put options on Nortel common stock which I wrote
(sold) during the period between April 24, 2003 through April 27, 2004, inclusive (include all
re-purchases no matter what the date):
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Aggregate Cost |
Date of re-Purchase |
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(including |
(List Chronologically) |
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Number of |
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Expiration Date |
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Sale Price |
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commissions, |
(Month/Day/Year) |
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Contracts |
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Strike Price |
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(Month/Day/Year) |
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Per Share |
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taxes, and fees) |
___/___/___
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$
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___/___/___
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$
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$ |
___/___/___
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$
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___/___/___
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$
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$ |
___/___/___
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$
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___/___/___
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$
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$ |
___/___/___
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$
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___/___/___
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$
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$ |
22. The following put options on Nortel common stock which I wrote (sold) during the
period between April 24, 2003 through April 27, 2004, inclusive were exercised by the holders
thereof and assigned to me(include all re-purchases no matter what the date):
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Expiration Date |
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Date of Exercise |
Number of Contracts |
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Strike Price |
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(Month/Day/Year) |
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(Month/Day/Year) |
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$
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___/___/___
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___/___/___ |
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$
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___/___/___
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___/___/___ |
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$
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___/___/___
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___/___/___ |
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$
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___/___/___
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___/___/___ |
23. At the close of business on April 27, 2004, I was obligated on the following put
options on Nortel common stock:
9
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|
Number of Contracts |
|
Strike Price |
|
Expiration Date (Month/Day/Year) |
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$
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___/___/___ |
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$
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___/___/___ |
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$
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___/___/___ |
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$
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___/___/___ |
IF YOU NEED ADDITIONAL SPACE TO LIST YOUR TRANSACTIONS PHOTOCOPY THIS PAGE
24. Request for Taxpayer Identification Number:
For tax purposes, enter the appropriate tax identification number below for the Beneficial
Owner(s). For most United States individuals, this is your Social Security Number. For most United
States entities other than individuals, this is your Taxpayer Identification Number. For most
Canadian individuals, this is your Social Insurance Number. For most Canadian entities other than
individuals, this is your Business Number. If you fail to provide this information, your claim may
be rejected.
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Individuals: |
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or
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Social
Insurance Number |
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Estates, Trusts, Corporations, etc.: |
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Taxpayer Identification Number
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Business Number/Trust Number |
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Certification |
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U.S. Persons and Entities: /___/ I (We) certify that I am (we are) NOT subject to
backup withholding under the provisions of Section 3406 (a)(1)(c) of the Internal Revenue Code
because: (a) I am (We are) exempt from backup withholding, or (b) I (We) have not been notified by
the I.R.S. that I am (we are) subject to backup withholding as a result of a failure to report all
interest or dividends, or (c) the I.R.S. has notified me (us) that I am (we are) no longer subject
to backup withholding.
10
NOTE: If you have been notified by the I.R.S. that you are subject to backup withholding, please
strike out the language that you are not subject to backup withholding in the certification above.
Canadian or Other Non-U.S. Persons and Entities: /___/ The beneficial owner is not a
U.S. person and the income to which this form relates, if any, is not effectively connected with
the conduct of a trade or business in the United States.
UNDER THE PENALTIES OF PERJURY, I (WE) CERTIFY THAT ALL OF THE INFORMATION I (WE) PROVIDED ON
THIS PROOF OF CLAIM FORM IS TRUE, CORRECT AND COMPLETE.
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Signature of Claimant (If this claim is being made on
behalf of Joint Claimants, then each must sign) |
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(Signature) |
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(Signature) |
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(Title/Capacity of person(s) signing, e.g. beneficial
purchaser(s), president, executor, administrator,
trustee, etc.) |
Date:
11
THIS PROOF OF CLAIM MUST BE SUBMITTED NO LATER THAN 2006, AND MUST BE MAILED TO:
In re Nortel II Securities Litigation
c/o [Claims Administrator]
Claims Administrator
Post Office Box ___
, __
A Proof of Claim received by the Claims Administrator shall be deemed to have been submitted
when posted, if mailed by , 2006, and if a postmark is indicated on the envelope and
it is mailed first class, and addressed in accordance with the above instructions. In all other
cases, a Proof of Claim shall be deemed to have been submitted when. actually received by the
Claims Administrator.
You should be aware that it will take a significant amount of time to process fully all of the
Proofs of Claim and to administer the Settlement. This work will be completed as promptly as time
permits, given the need to investigate and tabulate each Proof of Claim. Please notify the Claims
Administrator of any change of address.
REMINDER CHECKLIST
1. o Please be sure to sign this Proof of Claim on page [_]. If this Proof of Claim is
submitted on behalf of joint claimants, then both claimants must sign.
2. o Please remember to attach supporting documents. Do NOT send any stock certificates. Keep
copies of everything you submit.
3. o Do NOT use highlighter on the Proof of Claim or any supporting documents.
4. o If you move after submitting this Proof of Claim, please notify the Claims Administrator of
the change in your address.
12
NOTE: RECEIPT ACKNOWLEDGMENT NEEDED
The Claims Administrator will send a written confirmation of its receipt of your Proof of Claim. Do
not assume your claim is submitted until you receive written confirmation of its receipt. Your
claim is not deemed fully filed until the Claims Administrator sends you written confirmation of
its receipt of your Proof of Claim. If you do not receive an acknowledgement postcard within thirty
(30) days of your mailing the Proof of Claim, then please call the Claims Administrator toll free
at .
13
EXHIBIT A-3
NORTEL II SECURITIES LITIGATION
SUMMARY NOTICE OF PROPOSED SETTLEMENT CERTIFICATION OF
CANADIAN ACTIONS,
MOTIONS FOR LEGAL FEES AND SETTLEMENT
FAIRNESS HEARING
THIS NOTICE MAY AFFECT YOUR RIGHTS, PLEASE READ CAREFULLY
ALL PERSONS OR ENTITIES WHO PURCHASED NORTEL NETWORKS CORPORATION
(“NORTEL”)
COMMON STOCK OR CALL OPTIONS ON NORTEL COMMON STOCK OR WROTE
(SOLD) PUT OPTIONS
ON NORTEL COMMON STOCK (COLLECTIVELY “NORTEL SECURITIES”)
DURING THE PERIOD
APRIL 24, 2003 THROUGH APRIL 27, 2004 (THE “CLASS PERIOD”),
INCLUSIVE,
INCLUDING, BUT NOT LIMITED TO, THOSE PERSONS WHO TRADED IN NORTEL
SECURITIES ON
THE NEW YORK STOCK EXCHANGE AND/OR THE TORONTO STOCK EXCHANGE.
NOTICE OF PROPOSED SETTLEMENT
This Summary Notice Is directed to all members of the Classes described below, and is given
pursuant to Rule 23 of the United States Federal Rules of Civil Procedure and various Canadian
provincial class proceedings legislation. The proposed Settlement is more fully described in the
“Notice of Pendency and Certifications of Class Actions and Proposed Settlements, Motions for
Attorneys Fees and Settlement Fairness Hearings (Norte, II Notice)” (the “Long-Form Notice”) which
is currently being mailed to known Class Members. If you have not yet received a copy of the
Long-Form Notice you should request one from the Claims Administrator Identified in the section
below entitled “For More Information.
Briefly, this Summary Notice advises you, among other things, of a proposed settlement in the
following class actions in the United States and Canada:
• |
|
In Re Node/ Networks Corp. Securities Litigation, Master File No.
04 Civ. 2115 (LAP) in the United States District Court for the
Southern District of New York (“New York Court”) (“U.S. Action”); |
|
• |
|
Galardi v. Norte/ Networks Corporation, No. 05-CV-285606CP in the
Ontario Superior Court of Justice (“Ontario Court”) (“Ontario
National Action”); |
|
• |
|
Skarstedt v. Corporation Node/ Networks, No. 500-06-000277-059 in
the Superior Court of Quebec, District of Montreal (“Quebec
Court”) (“Quebec Action”); |
The Ontario National Action and the Quebec Action are collectively referred to as the
“Canadian Nortel II Actions”. The U.S. Action and the Canadian Nortel 11
Actions are collectively referred to as the “Nortel Ii Actions”.
TERMS OF PROPOSED SETTLEMENT
The Settlement will provide total proceeds consisting of approximately $370,157,418 in cash, plus
314,333,875 shares of Nortel common stock for the benefit of members of the Classes. In addition,
Norte will adopt certain corporate governance enhancements. The Settlement resolves lawsuits over
whether Nortel misled Investors about its historic and future earnings during the Class Period, The
Settlement is contingent on approval by the Courts in the Nortel II Actions and in certain related
actions against Nortel in the United States and Canada (the “Norte) I Actions”) for which there is
a separate notice. The Settlement is further subject to certain regulatory approvals. The
Settlement constitutes a full and final resolution of claims and causes of action raised by members
of the Classes in the Nortel II Actions and encompassed In the Settlement.
NOTICE OF CERTIFICATION OF CLASSES
The U.S. Action was certified for purposes of the Settlement to proceed as a class action on behalf
of persons and entities, wherever located, who bought Nortel common stock or call options on Nortel
common stock or who wrote (sold) put options on Nortel common stock during the period April 24,
2003 through April 27, 2004, inclusive, and suffered damages thereby, including, but not limited
to, those persons or entities who traded in Nortel Securities on the New York Stock Exchange and/or
the Toronto Stock Exchange (the “U.S. Global Class”).
The Canadian Nortel II Actions have also been certified for settlement purposes on behalf of
Canadian Class Members. The Ontario Court and the Quebec Court have certified the following
classes for settlement purposes:
• |
|
Ontario National Class: All persons or entitles, except members of the Quebec Class, who
while residing In Canada at the time, purchased Nortel common stock or call options on
Nortel common stock, or wrote (sold) put options on Nortel common stock, during the period
between April 24, 2003 through April 27, 2004, inclusive. |
|
• |
|
Quebec Class: All persons or entities, the latter having not more than 50 employees at
the relevant time – please refer to the Long-Form Notice –, who, while residing in Quebec
at the time, purchased Nortel common stock or call options on Nortel common stock, or wrote
(sold) put options on Norte, common stock, during the period between April 24, 2003 through
April 27, 2004, inclusive. |
As described in detail in the Long-Form Notice, certain persons and entities are excluded from the
above Classes.
OPTING-OUT OF THE CLASS
If you are a member of any of the Classes you will be bound by the terms of the Settlement, if
approved, and you will not be able to bring or maintain any other claim or legal proceedings
against the defendants in connection with the allegations raised in the Nortel II Actions, unless
you exclude yourself (“opt-out”). If you are a member of any of the Classes and wish to exclude
yourself from the Settlement, you must make a request for exclusion in writing. In order to be
valid, each such request for exclusion must set forth the name and address of the person or entity
requesting exclusion, must expressly state that such person or entity requests exclusion from the
Classes, and must be signed by such person or entity. Requests for exclusion must be mailed to:
Nortel II Securities Litigation Exclusions
c/o The Garden City Group, Inc. Claims Administrator
P.O. Box 0000
City, ST 00000-0000
Requests for exclusion, to be effective, must be post-marked no later than (September 15, 2006).
If you exclude yourself from the Classes, you will not be bound by any judgment or other orders
made in the Norte) II Actions, will not be able to participate in the Settlement, and will retain
any rights you may have as against the defendants. Do not request exclusion if you wish to
participate in the Settlement.
NOTICE OF SETTLEMENT FAIRNESS/APPROVAL HEARINGS
As noted, in order for the Settlement to become effective, It must be approved by the New York
Court, the Ontario Court and the Quebec Court, each of which must be satisfied that the Settlement
is fair, reasonable, adequate and in the best interests of Class Members. Dates for the Settlement
Fairness/Approval Hearings have been scheduled with the respective courts as follows:
• in the U.S. Action: at ___:___.m. on day, ___, 2006, at the
United States District Court for the Southern District of New York, Daniel Patrick Moynihan United
States Courthouse, 500 Pearl Street, New York, NY.
• in the Ontario National Action: at ___:___.m. on day, ___,
2006, at the Ontario Superior Court of Justice, 361 University Avenue, Toronto, Ontario.
• in the Quebec Action: ___:___.m. on day, ___, 2006, at the
Superior Court of Quebec, District of Montreal, 1 Notre-Dame East, Montreal, Quebec.
If you are a member of any of the Classes and you do not oppose the Settlement, you need not appear
at the Settlement Fairness/Approval Hearings to indicate your approval. if you are a member of any
of the Classes and you wish to comment on or make an objection to the terms of the Settlement, you
should send your name, address and brief reasons for the objection to the Claims Administrator as
set forth in the Long-Form Notice prior to (September 15, 2006) You will be entitled to appear at
the Settlement Fairness/Approval Hearings and be heard if you wish to do so.
At the Settlement Fairness Hearing, plaintiffs’ counsel will apply to the respective Courts for
awards of legal fees and for reimbursement of expenses incurred in prosecuting the Nortel II
Actions.
PROOF OF CLAIM REQUIRED TO SHARE IN SETTLEMENT PROCEEDS
In order to receive any of the money or shares of Nortel common stock being made available through
the Settlement you must submit a Proof of Claim form by [November 30, 2006]. Proof of Claim forms
may be obtained by contacting the Clams Administrator at the addresses shown below.
FOR MORE INFORMATION
If you have not yet received the full printed Long-Form Notice and Proof of Claim form, you may
obtain copies of these documents by contacting the Claims Administrator. As there will be no
further notices sent directly to members of the Classes, you should keep yourself apprised of all
developments and updates by regularly contacting the Claims Administrator or by visiting:
Nortel II Securities Litigation Settlement
c/o The Garden City Group, Inc., Claims Administrator
P.O. Box 0000, City, ST 00000-0000
1-800-___- toll free
[www. .coom]
If there is a discrepancy between this Summary Notice and the Long Form Notice, the latter
prevails.
PLAINTIFFS’ COUNSEL:
For the U.S. Action: Lead Plaintiff’s Counsel Jeffrey N. Leibell, Esq., Bernstein Litowitz
Berger & Grossmann LLP, 1285 Avenue of the Americas, New York, New York 10019.
For the Ontario National Action: Ontario National Class Counsel: Joel P. Rochon, Rochon
Genova LLP, 121 Richmond Street West, Suite 900, Toronto, Ontario M5H 2K1.
For the Quebec Action: Quebec Class Counsel: Philippe H. Trudel, Trudel & Johnston, 85 de la
Commune East, 3rd Floor, Montreal, Quebec H2Y 1J1.
This Summary Notice has been approved by the United States District Court for the Southern District
of New York, the Ontario Superior Court of Justice and the Superior Court of Quebec.
2
EXHIBIT A-4
Nortel I and II Canadian Actions
Proposed Legal Notification Campaign
|
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Prepared by: |
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Jeanne C. Finegan, APR |
|
|
June 19, 2006 |
Table of Contents
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Page |
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INTRODUCTION |
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1 |
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1. Legal Notice Communication Methodology |
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2 |
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2. Multi-National Legal Notice Experience |
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4 |
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3. Media Rationale Overview |
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5 |
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4. Direct Mail |
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5 |
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5. Publication |
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8 |
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6. Notice Program Strategy |
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9 |
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7. Publication Analysis |
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12 |
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8. Frequency Rationale |
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14 |
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9. Prominent Ad Position, Formatting and “Plain Language” |
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15 |
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10. Internet Banner Advertising |
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15 |
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11. Media Relations |
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16 |
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12. Toll Free Information Line |
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16 |
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13. Web Site |
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17 |
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14. Conclusion |
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18 |
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15. Budget Overview |
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18 |
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16. Publication Summary |
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18 |
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17. Media Definitions |
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21 |
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18. Syndicated Research Definitions |
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22 |
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Exhibit 1 |
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24 |
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Exhibit 2 |
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44 |
|
i
INTRODUCTION
Since 1984, The Garden City Group, Inc. (GCG) has established a
history of providing successful class action settlement services.
Originally a practice unit of KPMG Peat Marwick, the company is
now a wholly owned subsidiary of Crawford & Company, the world’s
largest risk adjusting firm (NYSE symbols CRD.A/CRD/B).
For over 20 years, GCG has specialized in the design and
implementation of Class Action notification campaigns. GCG’s team
has designed and implemented large domestic and international
campaigns as well as highly focused local campaigns for class
action proceedings. GCG has also handled the notice and
administration of some of the largest securities settlements of
all time. Our recent experience includes the $6.2 billion WorldCom
case (where we have processed nearly one million claims); the $1.1
billion Royal Ahold case (which included mailing notice to class
members in more than 100 countries); and the $1 billion IPO
settlement where we mailed more than 17 million notices.
Jeanne C. Finegan, Senior Vice President, GCG
Jeanne Finegan, APR, has more than 20 years of communications and
advertising experience. She is a nationally recognized expert in
legal notice programs, both in Federal and State courts. Finegan
has lectured and published extensively on various aspects of legal
noticing. Her articles have been published in The National Law
Journal, The ABA’s Class Action Litigation Reporter, and The
International Risk Management Institute, among others. She has
provided expert testimony before Congress on issues of notice and
served the Consumer Product Safety Commission (CPSC) as an expert
to determine ways in which the Commission can increase the
effectiveness of its product recall campaigns. She is accredited
The Garden City Group, Inc. # 105 Maxess Road # Melville. NY 11747-3836 /Page 1
(APR) in Public Relations by the Universal Accreditation Board, a
program administered by the Public Relations Society of America.
Finegan has designed and implemented many of the nation’s largest
and high profile legal notice communication programs. Her
multi-national experience includes some of the most high-profile
restructuring communications programs involving international
Notice. She has designed legal notices for a wide range of class
actions and consumer matters that include product liability,
construction defect, antitrust, medical/pharmaceutical, human
rights, civil rights, telecommunication, media, environment,
securities, banking, insurance, and bankruptcies. Attached hereto
as Exhibit 1 is Finegan’s comprehensive curriculum vitae.
1. Legal Notice Communication Methodology1
Within the context of “Expert Opinion,” two U.S. Supreme Court
decisions, Daubert v. Merrell Dow Pharmaceuticals, 509 U.S. 579
(1993), and Kumho Tire Co. v. Carmichael, 526 U.S. 137 (1999),
suggest that when we design a media plan for submission to a court
for approval, as experts, we must: 1) Apply a technique that can
be tested by peers; and 2) Use industry accepted methodology.
Therefore, the following legal notice proposal was developed using
a scientific method accepted within the advertising industry for
modeling target class members by their demography and media
consumption habits.
Most importantly, in formulating a program for delivering
“Appropriate Notice,” we have been mindful of the natural justice
and fair process concerns expressed by the Canadian courts, as
well as of the factors listed in the Ontario Class Proceedings
Act, S.O.
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1 |
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The Canadian plan was calculated based on
data provided by the Print Measurement Bureau (PMB) and The Newspaper Audience
Databank (NADbank). |
The Garden City Group, Inc. # 105 Maxess Road # Melville. NY 11747-3836 /Page 2
1992, c. 6, s. 17, the applicable British Columbia
statute (R.S.B.C. 1996, c. 50, s. 19), and the relevant provisions
in the Quebec Code of Civil Procedure.
The purpose of this document is to fully describe our methodology
for modeling a target audience and then appropriately selecting
the methods of communication that will best reach them, including
direct mail, published notice, third-party outreach, and media
relations. It is our intention to provide to the Courts of Canada
a well-formulated notice plan that defines the target audience by
its demography and media consumption habits, as well as the
percentage reached by this campaign and how frequently the target
audience will have the opportunity to see the message as
calculated by accepted advertising industry practice.
Our analysis is designed to be rigorous and well calculated based
on available research and scientific analysis. However, as with
all social sciences, it should be noted that there is no one
absolute formula for reaching these conclusions. The calculation
of human behavior and media consumption is not an exact science,
but instead it is a combination of science and judgment based upon
knowledge and experience with advertising industry methodologies
that are traditionally utilized in designing legal notice
programs.
This proposal is submitted in connection with the Nortel I and
Nortel II United States and Canadian class actions.2
This proposal
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2 |
|
The Nortel I Settlement includes three
actions covered by Canadian Law: (i) Law, et al., v. Nortel Networks Corp., et
al., Ontario Superior Court of Justice Commercial List, Court file No.
02-CL-4605 (the “Ontario Action”); (ii) Jeffrey, et al., v. Nortel Networks
Corp., et al., Supreme Court of British Columbia, No. S015159 Vancouver
Registry (the “British Columbia Action”); and (iii) Association de Protection
des Epargnants et Investissuers du Quebec v. Nortel Networks Corp., Superior
Court, District of Montreal No.: 500-06-000 126-017 (the “Quebec Proceeding”). |
|
|
|
The Nortel II Settlement includes two actions governed by Canadian law:
(i) Gallardi v. Nortel Networks Corp., Ontario Superior Court of Justice
Commercial List, Court No. 05-CV-285606CP (the “Ontario Action”); Skarstedt v.
Nortel Networks Corp., Superior Court, District of Montreal, No.
500-06-000277-059 (the “Quebec Proceeding”).
These five actions/proceedings are collectively referred to herein as the
Canadian Actions. |
The Garden City Group, Inc. # 105 Maxess Road # Melville. NY 11747-3836 /Page 3
addresses only the Canadian outreach effort.
Adhering to the highest communication and outreach standards, this
Notice Program is based on a scientific methodology that is used
throughout the advertising industry and one which has been
embraced by Courts in the United States and in Canada. Therefore,
GCG has designed a Notice Program to “reach”3 the
greatest practicable number of class members.
2. Multi-National Legal Notice Experience
GCG’s ground breaking multi-national efforts are commonly cited by
Legal Notice Experts. Our benchmark international cases (see In
re: Vancouver Women’s Health Collective Society v. A.H. Robins
Co., 820 F.2d 1359 (4th Cir. 1987), and In re: Lindsey v. Dow
Corning Corp., Civil Action No. CV 94-P-11558-S), have been cited
as international legal notice standards. As demonstrated below,
GCG is particularly qualified to develop and implement a legal
notice program that will effectively and efficiently reach the
targeted potential class members in a manner that is similar in
scope and form to other multi-national court-approved notice
programs.
In re Vancouver Women’s Health Collective Soc y v. A. H. Robins
Co., 820 F.2d 1359, 1364 (4th Cir. 1987). In an appellate
opinion, the Honorable Robert R. Merhige, Jr., Senior District
Judge found that [**15] “ the notification program used by Robins
was, under the circumstances, reasonable. The evidence indicates
that every news outlet in the world received the information.
Similarly, there is fairly strong evidence that the news was
broadly disseminated worldwide. A battery of world health and
welfare organizations also disseminated the information. It
appears to this court that the extensive notification program was
a success.
Lindsey, et al., v. Dow Corning Corp., et al., Civil Action No. CV
94-P-11558-S. In an order approving the Notice of Settlement,
These five actions/proceedings are collectively referred to herein as the Canadian Actions.
|
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3 |
|
Reach is the number or percentage of
different persons exposed to a specific media schedule. |
The Garden City Group, Inc. # 105 Maxess Road # Melville. NY 11747-3836 /Page 4
United States District Judge Samuel J Pointer, Jr., stated,
“Indeed, the efforts to provide information to such persons must
be viewed as among the most extensive and complete ever
undertaken.” The court finds and concludes that, under these
circumstances, the notice program, with all its components,
satisfies constitutional requirements and, in the words of Rule
23, constitutes “the best notice practicable under the
circumstances, including individual notice to all members who can
be identified through reasonable effort.”
Other samples of our international experience are included as
Exhibit 2.
3. Media Rationale Overview
GCG has designed a Notice Program that is consistent with other
United States Court-ordered multi-national notice programs and
with the various Canadian class action statutes. In formulating a
program for delivering “Appropriate Notice” that meets the
concepts of natural justice and fair process we are guided by
sound principles of communication. We are utilizing nationally
syndicated Canadian media research bureaus to provide both
demographic and media consumption habits of the Canadian
population. These data are used by Canadian advertising agencies
as the basis to select media most appropriate to reach specific
target audiences.
We are confident that class members will be provided with multiple
opportunities to see this Notice through: 1) Mailed notice to all
reasonably identifiable class members who purchased Nortel stock
during the class period; 2) Publication in Canada in appropriate
magazines and newspapers; 3) Internet banner ads; 4) Media
relations; 5) a Toll-free information line; and 6) a Web site.
4. Direct Mail
In securities class actions in the United States, the
long-accepted practice for disseminating notice to the class
members is through
The Garden City Group, Inc. # 105 Maxess Road # Melville. NY 11747-3836 /Page 5
direct mailings. However, there is never one
defined mailing list of class members. Rather, we need to cull
together a complete list from various sources. The first step is
to mail notice to all record holders of the subject company’s
publicly traded securities during the Class Period. This list is
provided to us by the company’s transfer agent. These record
holders, however, are usually just the tip of the iceberg in terms
of’ the potential class members that we reach. The overwhelming
majority of class members are found through the network of
brokerage firms, banks and other third-party nominees whose
clients and/or customers may have purchased a company’s stock
during the appropriate Settlement Class Period. These firms hold
stock in street name on behalf of their customers and, through the
years, have developed specialized departments to respond to
requests for class member lists.
During its 20-year history of performing class action settlement
administration, GCG has built and maintained a proprietary
database of the largest brokerage firms, banks, institutions and
other nominees (the “Broker Database”). This Broker Database is
continually monitored and updated as brokerage firms change
addresses, go out of business and/or come into existence.
Currently, GCG has more than 2,500 such firms in its U.S. database
and thousands more in its international database.
After notice is mailed, these brokerage firms respond in one of
two ways. First, many firms provide us with lists of clients
believed to be class members (i.e., they purchased the requisite
security during the applicable time period). These lists come in
the forms of electronic feeds of data as well as hard-copy labels
and other formats. GCG, in turn, updates its database records for
the appropriate case to reflect these names and addresses and then
mails the notice (and usually a claim form) to these individuals
and
The Garden City Group, Inc. # 105 Maxess Road # Melville. NY 11747-3836 /Page 6
entities. Other nominee firms, ostensibly due to privacy
concerns, do not provide names of their clients, but rather,
request copies of the notice packet in bulk so that they can
forward notice directly to their clients.
In large cases such as this, GCG conducts follow-up telephone
campaigns with these nominee firms to make certain that they have
received the notice and that they have complied with the
requirements described therein. To help ensure compliance, we will
also ask these nominee firms to submit to us a compliance
certificate, which basically confirms that they searched their
records and provided us with names and addresses of potential
class members and/or that they actually mailed the notice packets
that they requested. We expect to employ this methodology of
direct mail notice in both the United States and Canada in
connection with the Nortel I and Norte! II Settlements. GCG’s
database already contains names and addresses of 185 of the
largest Canadian nominees to be targeted for all securities
mailings. This list was updated through extensive research only a
few months ago in connection with another large international
settlement. GCG has experience receiving names and requests from
these firms in Canada and we are, therefore, confident that we can
rely on their participation in this case. We have also worked in
the past with Dun & Bradstreet to purchase additional lists of
banks and brokerage firms in countries outside the United States.
We will work with them to determine whether they have names and
addresses that genuinely supplement our Canadian nominee mailings.
However, because we cannot reasonably expect the Canadian
brokerage firms to be as comfortable with this process as are the
firms in the U.S. – because plainly there is not yet the volume of
securities class actions settlements in Canada that exists in the
U.S.
The Garden City Group, Inc. # 105 Maxess Road # Melville. NY 11747-3836 /Page 7
– we are buttressing this direct mail program with a very
comprehensive notice publication program, which is described
below. We expect that this media program will be at least
comparable, if not more fulsome than the program developed for the
U.S.
5. Publication
The Canadian Notice plan is calculated based on data provided by
The Print Measurement Bureau (PMB). PMB is Canada’s leading
nationally syndicated media research bureau, which provides data
on publication readership, product usage and demographic
information. PMB is widely accepted by the top advertising
agencies. Additionally, the Canadian plan incorporates data
provided by The Newspaper Audience Databank (NADbank). NADbank
studies newspapers on a market-by-market basis.
Based on my over 20 years of experience in the field of
advertising, public relations and marketing communications, I
believe that this syndicated research provides a valid basis for
determining the multimedia characteristics of specific target
audiences.
The closest definition that PMB provides on which to base our
research for the Nortel Legal Notice Program is “People who own
common or preferred stock.” Based on this definition, we have
conducted an extensive analysis of the demographics of the target
audience in Canada for their tendencies to read various magazines
and newspapers.
The Garden City Group, Inc. # 105 Maxess Road # Melville. NY 11747-3836 /Page 8
Based on this data, the media program alone is estimated to reach
84.22 percent of “Canadians who own common or preferred stock,”
with an average frequency of 3.82 times.4
Demographic Profile – Canada
Target: People who own common or preferred stock
|
|
|
|
|
Men |
|
|
62.38 |
% |
Women |
|
|
37.62 |
% |
|
|
|
|
|
Ages 35-64 |
|
|
67.15 |
% |
|
|
|
|
|
Own Home |
|
|
87.84 |
% |
|
|
|
|
|
Employed |
|
|
66.00 |
% |
Employed Full Time |
|
|
62.99 |
% |
|
|
|
|
|
HHI $75K-$150K |
|
|
57.10 |
% |
HHI $50K+ |
|
|
79.72 |
% |
|
|
|
|
|
English Canada |
|
|
76.64 |
% |
French Canada |
|
|
23.36 |
% |
|
|
|
|
|
Married |
|
|
77.44 |
% |
|
|
|
|
|
Ontario |
|
|
40,29 |
% |
Quebec |
|
|
25.90 |
% |
British Columbia |
|
|
13.59 |
% |
Alberta |
|
|
10.37 |
% |
Manitoba/Saskachewan |
|
|
5.69 |
% |
Source: PMB 2006 Two-Year Readership Database
6. Notice Program Strategy
Demographic profiles have been used for many years by advertising agencies as
the standard practice for defining media objectives and selecting media.
Demographics provide insight regarding a target
|
|
|
4 |
|
Detailed explanations of reach and frequency
are found on the Definitions page. |
The Garden City Group, Inc. # 105 Maxess Road # Melville. NY 11747-3836 /Page 9
audience’s age, ethnicity,
preferred language, income, population size and geographical distribution.
Additionally, data provided by PMB goes beyond basic demographics by analyzing
lifestyle characteristics, including media usage habits. These lifestyle
characteristics and demographic descriptions are segmented into distinct
cluster types. Each cluster uniquely describes demographics, attitudes, and
consumer behavior. For the purposes of targeting a legal notice program, these
clusters describe media usage patterns, and are used to define the extent of a
medium’s usage within a given cluster.
Based on this research, we have developed an approach utilizing broad-reaching
publications and more vertically targeted business publications that we know
the target has a likelihood of reading. Moreover, our research indicates over
22 percent of the Canadian population speak French. The chart below identifies
the percentage of French and/or English spoken by province.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Canadian Province |
|
English |
|
French |
|
Total Population* |
|
% Speak French |
Newfoundland and Labrador |
|
|
500,065 |
|
|
|
2,180 |
|
|
|
508,075 |
|
|
|
0.43 |
% |
Prince Edward Island |
|
|
125,215 |
|
|
|
5,670 |
|
|
|
133,385 |
|
|
|
4.25 |
% |
Nova Scotia |
|
|
834,315 |
|
|
|
34,155 |
|
|
|
897,570 |
|
|
|
3.81 |
% |
New Brunswick |
|
|
465,720 |
|
|
|
238,775 |
|
|
|
719,710 |
|
|
|
32.90 |
% |
Quebec |
|
|
572,085 |
|
|
|
5,788,655 |
|
|
|
7,126,580 |
|
|
|
81.24 |
% |
Ontario |
|
|
8,079,500 |
|
|
|
493,630 |
|
|
|
11,285,550 |
|
|
|
4.37 |
% |
Manitoba |
|
|
836,980 |
|
|
|
44,775 |
|
|
|
1,103,700 |
|
|
|
4.06 |
% |
Saskatchewan |
|
|
825,865 |
|
|
|
18,035 |
|
|
|
963,150 |
|
|
|
1.87 |
% |
Alberta |
|
|
2,405,935 |
|
|
|
59,735 |
|
|
|
2,941,150 |
|
|
|
2.03 |
% |
British Colombia |
|
|
2,885,300 |
|
|
|
56,100 |
|
|
|
3,868,875 |
|
|
|
1.45 |
% |
Yukon Territory |
|
|
24,840 |
|
|
|
890 |
|
|
|
28,525 |
|
|
|
3.12 |
% |
Northwest Territories |
|
|
28,985 |
|
|
|
985 |
|
|
|
37,105 |
|
|
|
2.60 |
% |
Nunavut |
|
|
7,370 |
|
|
|
400 |
|
|
|
26,665 |
|
|
|
1.50 |
% |
Total |
|
|
17,572,175 |
|
|
|
5,741,965 |
|
|
|
29,839,040 |
|
|
|
22.75 |
% |
|
Total
French Speakers |
|
|
6,741,965 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% French
Speakers of Total Pop. |
|
|
22.79 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
* Includes people who speak English & French and other languages
Source: Census 2001
Therefore, we have included a number of French general circulation
magazines and newspapers geared toward the French speaking population in
Canada, most particularly in Quebec.
The Garden City Group, Inc. # 105 Maxess Road # Melville. NY 11747-3836 /Page 10
Additionally, we analyzed total circulation and Readers Per Copy “RPC” of a
publication in order to understand its total readership. While this number does
not factor out duplication, it is illustrative as to the extent of the program.
Also this number only includes these consumer publications, and does not
include the multiple other methods of communications we are using, i.e. direct
mail, and media relations efforts. These additional methods of communication
will only further increase readership.
PMB research indicates that the magazines detailed below are the most
appropriate to reach the largest percentage of this target. The magazines used
in this Legal Notice program are published in either French and/or English and
deliver the broadest appropriate reach of “people who own common or preferred
stock.”
Canadian Magazines Selected for this Legal Notice Program
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Canadian Business
|
|
Bi-Weekly
|
|
E
|
|
|
92,000 |
|
|
|
11.8 |
|
|
|
1,085,600 |
|
|
1/4 Page
|
|
|
1 |
|
Maclean’s
|
|
Weekly
|
|
E
|
|
|
822,000 |
|
|
|
7.1 |
|
|
|
5,836,200 |
|
|
Page
|
|
|
2 |
|
L’actualite
|
|
Monthly
|
|
F
|
|
|
191,000 |
|
|
|
6.0 |
|
|
|
1,146,000 |
|
|
Full Page
|
|
|
1 |
|
Report on Business Magazine (Globe & Mail)
|
|
Monthly
|
|
E
|
|
|
288,000 |
|
|
|
5.0 |
|
|
|
1,440,000 |
|
|
1/4 Page
|
|
|
1 |
|
Financial Post Business Magazine
|
|
Monthly
|
|
E
|
|
|
221,000 |
|
|
|
5.9 |
|
|
|
1,303.900 |
|
|
1/4 Page
|
|
|
1 |
|
Time Canada
|
|
Weekly
|
|
E
|
|
|
239,000 |
|
|
|
11.5 |
|
|
|
2.748,500 |
|
|
1/4 Page
|
|
|
1 |
|
MoneySense
|
|
7X/Year
|
|
E
|
|
|
115.000 |
|
|
|
8.2 |
|
|
|
943,000 |
|
|
1/4 Page
|
|
|
1 |
|
Readers Digest (English Edition)
|
|
Monthly
|
|
E
|
|
|
1,990,000 |
|
|
|
7.2 |
|
|
|
14,328,000 |
|
|
Full Page
|
|
|
2 |
|
Readers Digest (French Edition)
|
|
Monthly
|
|
F
|
|
|
250,000 |
|
|
|
5.2 |
|
|
|
1,300,000 |
|
|
Full Page
|
|
|
1 |
|
Canadian Living
|
|
Monthly
|
|
E
|
|
|
538,000 |
|
|
|
8.2 |
|
|
|
4,411,600 |
|
|
1/4 Page
|
|
|
1 |
|
Coup de Pouce
|
|
Monthly
|
|
F
|
|
|
230,000 |
|
|
|
6.2 |
|
|
|
1,426,000 |
|
|
Full Page
|
|
|
1 |
|
Canadian Geographic
|
|
Monthly
|
|
E
|
|
|
230,000 |
|
|
|
17.8 |
|
|
|
4,094,000 |
|
|
1/2 Page
|
|
|
1 |
|
Chatelaine (English Edition)
|
|
Monthly
|
|
E
|
|
|
697.000 |
|
|
|
6.4 |
|
|
|
4,460,800 |
|
|
1/4 Page
|
|
|
1 |
|
Chatelaine (French Edition)
|
|
Monthly
|
|
F
|
|
|
209,000 |
|
|
|
6.2 |
|
|
|
1,295,800 |
|
|
Full Page
|
|
|
1 |
|
The National Post (Wed)
|
|
Daily
|
|
E
|
|
|
248,000 |
|
|
|
3.4 |
|
|
|
843,200 |
|
|
1/4 Page
|
|
|
1 |
|
The National Post (Sal)
|
|
Daily
|
|
E
|
|
|
268.000 |
|
|
|
2.6 |
|
|
|
696,800 |
|
|
1/4 Page
|
|
|
1 |
|
The Globe and Mail (Daily — Report on
Business Section)
|
|
Daily
|
|
E
|
|
|
322,000 |
|
|
|
4.1 |
|
|
|
1,320,200 |
|
|
1/4 Page
|
|
|
1 |
|
The Globe and Mail
(Sal — Report on Business Section)
|
|
Daily
|
|
E
|
|
|
402,000 |
|
|
|
3.2 |
|
|
|
1,286,400 |
|
|
1/4 Page
|
|
|
1 |
|
|
|
|
* |
|
Unit Size will depend on final size of Summary Notices. |
The Notice program includes publication in the two largest national
newspapers in Canada, The National Post and The Globe and Mail. To increase the
overall reach and effectiveness of this plan, GCG has added newspapers in the
top 10 Census markets. The Legal Notice will appear on both the highest day of
circulation as well as
The Garden City Group, Inc. # 105 Maxess Road # Melville. NY 11747-3836 /Page 11
the day business editorial is the most highly
concentrated.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Toronto Star
|
|
Toronto (Ontario)
|
|
E
|
|
|
2 |
|
|
1/4 Page
|
|
Sat.
|
|
|
673,663 |
|
|
Wed.
|
|
|
462,985 |
|
Toronto Sun
|
|
Toronto Ontario
|
|
E
|
|
|
2 |
|
|
1/2 Page Tab
|
|
Sun.
|
|
|
337,000 |
|
|
Mon.
|
|
|
194,000 |
|
Le Journal de Montreal
(Mon-Fri)
|
|
Montreal (Quebec)
|
|
F
|
|
|
2 |
|
|
Full Page Tab
|
|
Sat.
|
|
|
321,000 |
|
|
Wed.
|
|
|
268,000 |
|
Montreal Gazette
|
|
Montreal (Quebec)
|
|
E
|
|
|
2 |
|
|
1/4 Page
|
|
Sat.
|
|
|
153,016 |
|
|
Wed.
|
|
|
136,818 |
|
La Presse
|
|
Montreal (Quebec)
|
|
F
|
|
|
1 |
|
|
1/2 Page
|
|
Sat.
|
|
|
277,935 |
|
|
N/A
|
|
|
N/A |
|
The Vancouver Sun
|
|
Vancouver (British Columbia)
|
|
E
|
|
|
2 |
|
|
1/4 Page
|
|
Sat.
|
|
|
230,526 |
|
|
Wed.
|
|
|
173,145 |
|
Ottawa Citizen
|
|
Ottawa-Hull (Ontario-Quebec)
|
|
E
|
|
|
2 |
|
|
1/4 Page
|
|
Sat.
|
|
|
156,657 |
|
|
Wed.
|
|
|
127,792 |
|
La Drolt
|
|
Ottawa-Hull (Ontario-Quebec)
|
|
F
|
|
|
1 |
|
|
1/2 Page
|
|
Sat
|
|
|
39,889 |
|
|
N/A
|
|
|
N/A |
|
Calgary Herald
|
|
Calgary (Alberta)
|
|
E
|
|
|
2 |
|
|
1/4 Page
|
|
Fri.
|
|
|
140,728 |
|
|
Wed.
|
|
|
116,671 |
|
Edmonton Journal
|
|
Edmonton (Alberta)
|
|
E
|
|
|
2 |
|
|
1/4 Page
|
|
Fri.
|
|
|
143,312 |
|
|
Wed.
|
|
|
125,827 |
|
Le Journal de Quebec
|
|
Quebec (Quebec)
|
|
F
|
|
|
2 |
|
|
Full Page Tab
|
|
Sat.
|
|
|
122,863 |
|
|
Wed.
|
|
|
98,165 |
|
Quebec City Le Soleil
|
|
Quebec (Quebec)
|
|
F
|
|
|
1 |
|
|
1/2 Page
|
|
Sat.
|
|
|
112,660 |
|
|
N/A
|
|
|
N/A |
|
The Hamilton Spectator
|
|
Hamilton (Ontario)
|
|
E
|
|
|
2 |
|
|
1/4 Page
|
|
Sat.
|
|
|
122,572 |
|
|
Wed.
|
|
|
10%643 |
|
Winnipeg Free Press
|
|
Winnipeg (Manitoba)
|
|
E
|
|
|
2 |
|
|
1/4 Page
|
|
Sat.
|
|
|
164,106 |
|
|
Wed.
|
|
|
119,392 |
|
The London Free Press
|
|
London (Ontario)
|
|
E
|
|
|
2 |
|
|
1/4 Page
|
|
Sat.
|
|
|
112,182 |
|
|
Mon.
|
|
|
92,476 |
|
Subtotal:
|
|
|
|
|
|
|
27 |
|
|
|
|
|
|
|
3,108,109 |
|
|
|
|
|
2,020,914 |
|
|
|
|
* |
|
Unit size will depend on final size of Summary Notices. |
Additionally, we are further enhancing the Notice Program by adding the
largest general circulation newspaper in each of the Canadian provinces.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Moncton Times &
Transcript
|
|
New Brunwick
|
|
E
|
|
|
1 |
|
|
1/4 Page
|
|
Saturday
|
|
|
45,500 |
|
L’Acadie Nouvelle
|
|
Moncton (New Brunswick)
|
|
F
|
|
|
1 |
|
|
1/2 Page
|
|
Saturday
|
|
|
20,436 |
|
The Guardian
|
|
Prince Edward Island
|
|
E
|
|
|
1 |
|
|
1/4 Page
|
|
Saturday
|
|
|
20,746 |
|
The Halifax
Chronicle Herald
|
|
Nova Scotia
|
|
E
|
|
|
1 |
|
|
1/4 Page
|
|
Saturday
|
|
|
111,501 |
|
The Star Phoenix
|
|
Saskatchewan
|
|
E
|
|
|
1 |
|
|
1/4 Page
|
|
Friday
|
|
|
60,499 |
|
Nunavut News/North
|
|
Nunavet
|
|
E
|
|
|
1 |
|
|
1/2 Page Tab
|
|
Monday
|
|
|
6,213 |
|
Yukon News
|
|
Yukon
|
|
E
|
|
|
1 |
|
|
1/2 Page Tab
|
|
Friday
|
|
|
7,850 |
|
NWT/News North
|
|
Northwest Territories
|
|
E
|
|
|
1 |
|
|
1/2 Page Tab
|
|
Monday
|
|
|
9,672 |
|
The Telegram
|
|
Newfoundland
|
|
E
|
|
|
1 |
|
|
1/4 Page
|
|
Saturday
|
|
|
55,031 |
|
Subtotal:
|
|
|
|
|
|
|
9 |
|
|
|
|
|
|
|
337,448 |
|
|
|
|
* |
|
Unit Size will depend on final size of Summary Notices. |
All unit sizes and pricing presented in this proposal are subject to
change depending on the final text of the Summary Notices.
7. Publication Analysis
We have previously identified one way to measure media, which is reach. Reach
refers to those people who actually are exposed to a message. Two other media
measures of a publication are coverage (i.e., potential exposure through a
given publication) and index against a target. Coverage is the percentage of
the target audience that reads a magazine. For example, as shown in the chart
below,
The Garden City Group, Inc. # 105 Maxess Road # Melville. NY 11747-3836 /Page 12
Canadian Business reaches an estimated 10.78 percent of “people who own
common or preferred stock.” Canadian Living reaches an estimated 19.01 percent
of this target. It should be noted that the overall average estimated reach is
calculated through a random duplication formula widely accepted in the
advertising industry.
Index is an indicator of the tendency of a consumer to read a certain
publication. An index of 100 is a mean. An index greater than 100 indicates a
percentage greater than the average tendency to read a publication. For example
an index of 110 would mean that the target is 10 percent more likely than the
average person to read a publication.
The chart below lists each publication by its reach of those who own common or
preferred stock. The magazines selected for this Class either reach a
significant percentage of the target audience or they index well. As the chart
below indicates, the selected Canadian publications are well read by those who
own common or preferred stock. For example, Canadian Business is 176 percent
more likely to be read by our target audience of “those who own common or
preferred stock” than the average Canadian.
% Coverage and Composition Index Target: Own Common or Preferred Stock
Target: Own Common or Preferred Stock
|
|
|
|
|
|
|
|
|
Canadian Business |
|
|
10.78 |
% |
|
|
(276 |
) |
Maclean’s |
|
|
14.19 |
% |
|
|
(135 |
) |
L’actualite |
|
|
6.69 |
% |
|
|
(181 |
) |
Report on Business Magazine (Globe & Mail) |
|
|
14.52 |
% |
|
|
(279 |
) |
Financial Post Business Magazine |
|
|
13.39 |
% |
|
|
(285 |
) |
Time Canada |
|
|
12.05 |
% |
|
|
(121 |
) |
MoneySense |
|
|
7.63 |
% |
|
|
(224 |
) |
Reader’s Digest (English Edition) |
|
|
26.10 |
% |
|
|
(100 |
) |
Reader’s Digest (French Edition) |
|
|
6.02 |
% |
|
|
(129 |
) |
Canadian Living |
|
|
19.01 |
% |
|
|
(120 |
) |
Coup de Pouce |
|
|
5.76 |
% |
|
|
(112 |
) |
Canadian Geographic |
|
|
14.79 |
% |
|
|
(100 |
) |
Chatelaine (English Edition) |
|
|
17.87 |
% |
|
|
(111 |
) |
Chatelaine (French Edition) |
|
|
5.62 |
% |
|
|
(121 |
) |
The National Post (Wed) |
|
|
9.37 |
% |
|
|
(309 |
) |
The National Post (Sat) |
|
|
8.23 |
% |
|
|
(322 |
) |
The Globe and Mall(Daily — Report on Business Section) |
|
|
12.25 |
% |
|
|
(256 |
) |
The Globe and Mall (Sat — Report on Business Section) |
|
|
11.65 |
% |
|
|
(254 |
) |
Source: PMB 2006 Two-Year Readership Database
The Garden City Group, Inc. # 105 Maxess Road # Melville. NY 11747-3836 /Page 13
We have selected broad reaching magazines for this Legal Notice program.
Additionally, we are using ad sizes that will be noticed by potential class
members, while maintaining cost efficiency. In that regard, we are recommending
certain ad unit sizes. For example, we are recommending half-page ads or larger
in the magazines, depending on final length of Summary Notice(s). According to
Magazine Dimensions 2005, “Studies show that a typical reader of a monthly
publication looks at or reads the issue about three times over a 12-week
interval. So the vast majority of the audience can be assumed to have scanned
all ads (via page openings) regardless of ad size or color.”
8. Frequency Rationale
Why do we need to expose the target audience to the Legal Notice more than
once? Author Michael J. Naples, suggests an answer. He has found a relationship
between frequency and message communication success. Among his conclusions:
“The weight of evidence suggests strongly that an exposure frequency of at
least two (2x) within a purchase cycle is an effective level.” Effective
Frequency: The Relationship Between Frequency and Advertising Effectiveness —
Association of National Advertisers, New York, New York 1988.
The table below reviews correlation between various factors and recommended
frequency in a notice program.
|
|
|
|
|
|
|
|
|
High |
|
Moderate |
|
Low |
Factor |
|
Frequency |
|
Frequency |
|
Frequency |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Garden City Group, Inc. # 105 Maxess Road # Melville. NY 11747-3836 /Page 14
9. Prominent Ad Position, Formatting and “Plain Language”
The concept of “plain language” in Notice is one that has received much
attention. Plain language is simply a more conversational form of
communication. The same style is used when reporting the news. The concept,
now integrated into Legal Notice practice, is one that has received note from
various authorities. For additional information, please visit
www.fjc.gov/public/home.nsf; www.plainenglish.co.uk and
www.plainlanguagenetwork.org.
The published Notice will be formatted in a manner consistent with these and
other guidelines, including Federal Judiciary’s guidelines on easy to read,
plain language notice.
As noted in a RAND Study, the Louisiana-Pacific Inner Seal Siding Notice (1995)
was actually one of the first published plain language notices. It was
co-written by Jeanne Finegan. The RAND study suggested that the plain language
text from the L-P notice was more likely than other notices to attract the
attention of class members.5
Consistent with the Federal Judiciary’s guidelines, the black and white Notice
will have a bold headline and will call attention, by way of bold type, to
important details, such as class definitions, how individuals can obtain more
information by way of mail, toll-free numbers or a web address, relevant dates
and deadlines, and other salient points. We will make a best effort to request
prominent positioning in the magazines, namely right hand page, as far forward
as possible.
|
|
|
5 |
|
Deborah R. Hensler et al., CLASS ACTION
DILEMAS, PURSUING PUBLIC GOALS FOR PRIVATE GAIN. RAND (2000). |
The Garden City Group, Inc. # 105 Maxess Road # Melville. NY 11747-3836 /Page 15
10. Internet Banner Advertising
Banner advertising is recognized as an effective method of increasing brand
recall and product interest. It is also highly cost-efficient as a means of
generating brand awareness. GCG will design a banner advertisement for
placement on specific heavily trafficked areas on each of the Internet portals.
These banners will be targeting finance executives within Investments &
Securities.
We would place banner advertising on financial focused websites such as Canada,
Sympatico MSN Finance Channel in English & French, Sympatico MSN — Hotmail
targeted to financial executives in English & French, Yahoo, National Post
Online, Globe & Mail – Globelnvester.com, and AOL Money & Technology network
targeting Canada. The precise sites will be chosen at the time of the media
buy.
11. Media Relations
GCG will design a media relations campaign that includes distribution of a
press release over PR Newswire including Canadian news wires. The press release
will be broadly distributed to the media, as well as focused directly to the
securities industry. The press release will alert the media of the details of
the case, giving them the opportunity to report on the case and provide
additional media exposure by way of news stories to their audiences.
12. Toll Free Information Line
Complementing the Notice Program will be GCG’s ancillary telephone support and
website established especially for this case. The summary notice will direct
class members to the toll-free telephone number and the website URL for
additional information about the settlement.
The Garden City Group, Inc. # 105 Maxess Road # Melville. NY 11747-3836 /Page 16
GCG is able to offer automated information about different aspects of the
settlement through our Interactive Voice Response (IVR) platform. We will
provide (in both French and English) information about deadlines, class
members’ rights, background of the case, how to submit a claim, and other
pertinent information. In addition to this automated platform we will use our
call center facility to set up dedicated operators for this settlement. Our
call center’s main operational site is in Sarasota, Florida. However, we have
many other available locations from which we run cases. Here, we anticipate
using our Montreal site, where we have the capacity to use more than 100 seats
(far more than needed). All of the Representatives in this facility are
bilingual (English and French Canadian) professional (most have earned a
college degree), and have extensive customer service experience.
Regarding connectivity to our IVR platform, all of our domestic toll free
numbers automatically include “Extended Call Coverage” (ECC) which provides
connectivity from Canada and all of the U.S. Territories without any additional
set up. In addition, the transfer of a call from the IVR to a representative in
Montreal will be seamless as the infrastructure is already in place. Our IVR
has limitless capacity and can be customized to accommodate any foreign
language requirement.
13. Web Site
We also intend to create a case-specific web site that provides answers to
frequently asked questions as well as postings of all relevant
settlement-related documents. Class members will be able to access and download
copies of the notices and the claim forms and will have access to relevant
Court orders. This web site may be accessed by anyone in Canada or the U.S. and
will be available in English and French.
The Garden City Group, Inc. # 105 Maxess Road # Melville. NY 11747-3836 /Page 17
14. Conclusion
Based on our experience in planning and implementing class action Notice it is
our judgment that this broad reaching Notice program is reasonably calculated,
using appropriate tools and methodology accepted in the advertising industry,
to effectively reach targeted class members in Canada.
15. Budget Overview
Below is a cost summary of the proposed Canadian Notice Program:
|
|
|
|
|
National Publications* |
|
$ |
277,817.17 |
|
Local Newspapers — Highest Circ Day* |
|
$ |
96,303.59 |
|
Local Newspapers — Best Business Day* |
|
$ |
78,096.92 |
|
Local Newspapers – Additional* |
|
$ |
12,817.74 |
|
Internet Banner Advertising |
|
$ |
95,855.33 |
|
Media Outreach |
|
$ |
1,985.00 |
|
Affidavits |
|
$ |
6,600.00 |
|
Total |
|
$ |
569,475.75 |
* |
To the extent we are asked to place separate ads for Nortel I and Nortel II,
the cost will essentially double. Pricing above based on 2006 pricing and
current exchange rate. Subject to change based on exchange rate at time of buy.
16. Publication Summary
Canadian Business
Provides news, opinion and community for business leaders, entrepreneurs and
investors in Canada. Bi-Weekly.
|
|
|
* |
|
Final pricing will ultimately depend on
the size of the final approved Summary Notice(s). |
The Garden City Group, Inc. # 105 Maxess Road # Melville. NY 11747-3836 /Page 18
Maclean’s
Publishes the latest in health, education, personal finance, entertainment,
personalities, politics and sports, plus thought-provoking columnists and
special reports. Weekly.
L’actualite
Covers news and culture in Canada. Monthly.
Report On Business Magazine (Globe & Mail)
Considered the most comprehensive compilation of economic news in Canada.
Standard Report on Business sections are typically fifteen to twenty pages and
include the listings of major Canadian, US, and international stocks, bonds,
and currencies. Monthly.
Financial Post Business Magazine
Consistently provides context, analysis and understanding to current trends,
companies and issues that are shaping the economy and Canadians’ lives. Topics
include corporate strategies, profiles of top political and business leaders
with articles aimed at the broader interests of its upscale audience. Monthly.
Time Canada
Provides analysis and viewpoints. Provides insight and big-picture perspective
on the most important news of the day, at home and around the world. It covers
the transformational issues affecting society — socially, politically,
economically and culturally. Weekly.
MoneySense
Covers personal finance in Canada. Each issue contains insightful and
informative columns and articles to help consumers make the most of their
money. 7x a Year.
The Garden City Group, Inc. # 105 Maxess Road # Melville. NY 11747-3836 /Page 19
Reader’s Digest
(English Edition)
Puts the world in perspective through a fusion of timely original editorial and
select excerpts of the best journalism in print. It informs, entertains and
inspires people to take action at a time when mass media prominently shapes the
culture. Monthly.
Reader’s Digest
(French Edition)
French edition of the publication. Monthly.
Canadian Living
Provides readers with smart solutions for everyday living. The place to turn to
first for I-can-do-it recipes for midweek family suppers and elegant
entertaining, up-to-the-minute health and wellness information, and practical
parenting and family advice-plus inspiring fashion, beauty and home decor ideas
that make real sense in busy lives. Daily.
Coup de Pouce
Committed to helping women and their families living in Quebec, it delivers a
wealth of information and practical advice. Editorial covers food, health,
beauty and fashion, parenting, travel and home. Monthly.
Canadian Geographic
Delivers unmatched coverage of issues related to Canada and its people, all
brought to vivid life through stunning photography and unforgettable writing.
Monthly.
The Garden City Group, Inc. # 105 Maxess Road # Melville. NY 11747-3836 /Page 20
Chatelaine
(English Edition)
Covers a variety of women’s interests, from fashion and relationships to health
information, profiles of successful women and journalism on social and
political issues relevant to women. Monthly.
Chatelaine
(French Edition)
French edition of the publication. Monthly.
The National Post
A major Canadian English language national newspaper based in Toronto. Daily.
The Globe and Mail
Often considered the newspaper of record in Canada, it is a major Canadian
English language national newspaper based in Toronto. Daily.
17. Media Definitions
REACH – The number of different people (or homes) exposed to an advertisement
one or more times. Reach is expressed as an estimated percentage of the defined
target population that has an opportunity to see the ad.
FREQUENCY – The average number of exposures received by the people who were
reached by the media schedule.
GROSS IMPRESSIONS – The sum of audiences for all vehicles (such as newspapers
and/or magazines) on an advertising schedule.
READERS-PER-COPY (RPC) – The average number of readers-per—copy of a
publication is computed by dividing the total number
The Garden City Group, Inc. # 105 Maxess Road # Melville. NY 11747-3836 /Page 21
of different people who
read or looked into an average issue of a magazine by the magazine’s total
circulation, This number is based upon the assumption that readers will “pass
along” their copy of a magazine for others to read as well.
18. Syndicated Research Definitions
PMB Print Measurement Bureau is Canada’s leading syndicated study for
single-source data on print readership, non–print media exposure, product usage
and lifestyles. Its reputation is based on over 30 years of accurate, in-depth
measurement of Canadian consumer behavior.
PMB is a non-profit organization, representing the interests of Canadian
publishers advertising agencies, advertisers and other companies.
The first national PMB study was conducted in 1973. Since then, it has grown to
the point where it now uses an annual sample of 24,000 to measure the
readership of over 120 publications and consumer usage of over 2,500 products
and brands. The PMB 2006 study is based on 25,165 interviews conducted over 24
months (October 2003 — September 2005).
*See www.pmb.ca/public/e/index.htm.
INTERACTIVE MARKET SYSTEMS (IMS) — IMS is the leading international provider of
information systems and solutions for the media industry. IMS provides media
planning and analysis software for both industry and proprietary research. One
function of IMS software is to run a reach and frequency report based on
formula models such as IMS Modal and Metheringham. These formulas create a
reach and frequency estimate.
The Garden City Group, Inc. # 105 Maxess Road # Melville. NY 11747-3836 /Page 22
NADbank — The NADbank 2005 study is the most comprehensive data source for
market level data on newspaper readership, retail shopping and product category
data in Canada.
The Garden City Group, Inc. # 105 Maxess Road # Melville. NY 11747-3836 /Page 23
JEANNE C. FINEGAN, APR
BIOGRAPHY
Jeanne Finegan, Senior Vice President of The Garden City Group, Inc.,
has more than 20 years of communications and advertising experience. She is
a nationally recognized expert in class action, bankruptcy and mass tort
notification campaigns. Finegan, is accredited (APR) in Public Relations by
the Universal Accreditation Board, a program administered by the Public
Relations Society of America.
She has provided expert testimony before Congress on issues of notice.
Additionally, she has provided expert testimony in both State and Federal
Courts regarding notification campaigns and conducted media audits of
proposed notice programs for their adequacy under Fed R. Civ. P. 23(c)(2)
and similar state class action statutes.
She has lectured, published and has been cited extensively on various
aspects of legal noticing, product recall and crisis communications and has
served the Consumer Product Safety Commission (CPSC) as an expert to
determine ways in which the Commission can increase the effectiveness of its
product recall campaigns.
Finegan has developed and implemented many of the nation’s largest and
most high profile legal notice communication and advertising programs. In
the course of her class action experience, Courts have recognized the merits
of, and admitted expert testimony based on, her scientific evaluation of the
effectiveness of notice plans. She has designed legal notices for a wide
range of class actions and consumer matters that include product liability,
construction defect, anti-trust, medical/pharmaceutical, human rights, civil
rights, telecommunication, media, environment, securities, banking,
insurance, mass tort, restructuring and product recall.
Her work includes:
In re: UAW v General Motors Corporation, Case No:
05-73991 Class Action, United States District Court Eastern District
of Michigan Southern Division (2006).
In re: Wicon, Inc. v. Cardservice International, Inc.,
BC 320215 Class Action Superior Court of the State of California for
the County of Los Angeles (2004).
The Garden City Group, Inc. # 105 Maxess Road # Melville. NY 11747-3836 /Page 24
In re: Varacallo, et aL v. Massachusetts Mutual Life
Insurance Company, et al., Civil Action No. 04-2702 (JLL), United
States District Court for the District of New Jersey (2004).
(Preliminary Approval Order at 9). ... the Court
found that ... “all of the notices are written in
simple terminology, are readily understandable by
Class Members, and comply with the Federal Judicial
Center’s illustrative class action notices.”
... By working with a nationally syndicated
media research firm, [Finegan ‘s firm] was able to
define a target audience for the MassMutual Class
Members, which provided a valid basis for determining
the magazine and newspaper preferences of the Class
Members. (Id. at 0 5.2). ... The Court agrees with
Class Counsel that this was more than adequate.
In re: John’s Manville (Statutory Direct Action Settlement,
Common Law Direct Action and Hawaii Settlement) Index No 82-11656
(BRL) United States Bankruptcy Court Southern District of New York
(2004). The nearly half-billion dollar settlement constituted three
separate notification programs, which targeted all persons, who had
asbestos claims whether asserted or unasserted, against the Travelers
Indemnity Company.
In the Findings of Fact and Conclusions of a Clarifying
Order Approving the Settlements, the Honorable Chief Judge
Burton R. Lifland said:
“As demonstrated by Findings of Fact, the
Statutory Direct Action Settlement notice program was
reasonably calculated under all circumstances to
apprise the affected individuals of the proceedings
and actions taken involving their interests,
Mullane v. Cent. Hanover Bank & Trust Co; 339
U.S. 306, 314 (1950), such program did apprise the
overwhelming majority of potentially affected
claimants and far exceeded the minimum notice
required The Court concludes that mailing direct
notice via U.S. Mail to law firms and directly to
potentially affected claimants, as well as
undertaking an extensive print media and Internet
campaign met and exceeded the requirements of due
process. The Court’s conclusion in this regard is
buttressed by the results over 26,000 phone
The Garden City Group, Inc. # 105 Maxess Road # Melville. NY 11747-3836 /Page 25
calls, 20,000 requests for information 8,000
website visits and 4,000 users registered to download
documents. The results simply speak for themselves.”
In re: Wilson v. Massachusetts Mutual Life Insurance
Company, Case No. D-101-CV 98-02814 (First Judicial District
Court County of Santa Fe State of New Mexico 2002.) This was a
nationwide notification program that included all persons in the
United States who owned, or had owned, a life or disability insurance
policy with Massachusetts Mutual Life Insurance Company and had paid
additional charges when paying their premium on an installment bases.
The class was estimated to exceed 1.6 million individuals.
(www.insuranceclassclaims.com/).
In granting preliminary approval to the settlement agreement,
the Honorable Art Encinias commented:
“The Notice Plan was the best practicable and
reasonably calculated, under the circumstances of the
action. ...land] that the notice meets or exceeds all
applicable requirements of law, including Rule
1-023(C)(2) and (3) and 1-023(E), NMRA 2001, and the
requirements of federal and/or state constitutional
due process and any other applicable law.”
In re: Deke, et al. v. Cardservice International,
Case No. BC 271679 Superior Court of the State of California
for the County of Los Angeles. (2004)
In the Final Order dated March I, 2004, The Honorable
Charles W. McCoy commented:
“The Class Notice satisfied the requirements of
California Rules of Court 1856 and 1859 and due
process and constituted the best notice practicable
under the circumstances.”
In re: Sager v. Inamed Corp. and McGhan Medical Breast
Implant Litigation, Case No. 01043771, Superior Court of
the State of California County of Santa Barbara. (2004).
In the Final Judgment and Order, dated March 30, 2004,
the Honorable Thomas P. Anderle stated:
The Garden City Group, Inc. # 105 Maxess Road # Melville. NY 11747-3836 /Page 26
“Notice provided was the best practicable under
the circumstances.”
In re: Florida Microsoft Antitrust Litigation
Settlement. Index number 99-27340 CA 11, 11`h Judicial
District Court of Miami – Dade County, Florida. (2003)
In the Final Order Approving the Fairness of the
Settlement, The Honorable Henry H. Harnage said:
“The Class Notice ... was the best notice
practicable under the circumstances and fully
satisfies the requirements of due process, the
Florida Rules of Civil Procedure, and any other
applicable rules of the Court.”
In re: Montana Microsoft Antitrust Litigation
Settlement. No. DCV 2000 219, Montana First Judicial
District Court – Lewis & Clark Co. (2003).
In re: South Dakota Microsoft Antitrust Litigation
Settlement. Civ. No. 00-235, State of South Dakota county
of Hughes in the circuit Court Sixth Judicial Circuit.
In re: Kansas Microsoft Antitrust Litigation
Settlement. Case No. 99C17089 Division No. 15
Consolidated Cases, District Court of Johnson County, Kansas
Civil Court Department.
In the Final Order and Final Judgment, the Honorable Allen
Slater stated:
“The Class Notice provided was the best notice
practicable under the circumstances and fully
complied in all respects with the requirements of due
process and of the Kansas State. Annot. 00-22.1”
In re: North Carolina Microsoft Antitrust Litigation
Settlement. No. 00-CvS-4073 (Wake) 00-CvS-1246 (Lincoln), State
of North Carolina, Wake and Lincoln Counties in the General Court of
Justice Superior Court Division North Carolina Business Court.
In the multiple state cases, Plaintiffs generally allege that
Microsoft unlawfully used anticompetitive means to maintain a
monopoly in markets for certain software, and that as a result, it
overcharged consumers who licensed its MS-DOS, Windows, Word, Excel
and Office software. The multiple legal notice
The Garden City Group, Inc. # 105 Maxess Road # Melville. NY 11747-3836 /Page 27
programs targeted both individual users and business users of
this software. The scientifically designed notice programs took into
consideration both media usage habits and demographic characteristics
of the targeted class members.
In re: MCI Non-Subscriber RatePavers Litigation, MDL
Docket No. 1275, (District Court for Southern District of Illinois
2001). The advertising and media notice program was designed with the
understanding that the litigation affects all persons or entities who
were customers of record for telephone lines presubscribed to
MCl/World Corn, and were charged the higher non-subscriber rates and
surcharges for direct-dialed long distance calls placed on those
lines. (www.rateclaims.com).
After a hearing to consider objections to the terms of the
settlement, The Honorable David R. Herndon stated:
“As further authorized by the Court, [Ms.
Finegan’s company] ... published the Court-approved
summary form of notice in eight general-interest
magazines distributed nationally; approximately 900
newspapers throughout the United States and a Puerto
Rico newspaper. In addition, [Ms. Finegan ‘s company]
caused the distribution of the Court-approved press
release to over 2,500 news outlets throughout the
United States... The manner in which notice was
distributed was more than adequate...”
In re: Sparks v. AT&T Corporation, Case No. 96-LM-983
(In the Third Judicial Circuit, Madison County, Illinois.) The
litigation concerned all persons in the United States who leased
certain AT&T telephones during the 1980’s. Finegan designed and
implemented a nationwide media program designed to target all persons
who may have leased telephones during this time period, a class that
included a large percentage of the entire population of the United
States.
In granting final approval to the settlement, the Court
commented:
“The Court further finds that the notice of the
proposed settlement was sufficient and furnished
Class Members with the information they needed to
evaluate whether to participate in or opt out of the
proposed settlement. The Court therefore concludes
that the notice of the proposed
The Garden City Group, Inc. # 105 Maxess Road # Melville. NY 11747-3836 /Page 28
settlement met all requirements required by law,
including all Constitutional requirements.”
In re: Pigford v. Glickman and U.S. Department of
Agriculture, Case No. CA No. 97-19788 (PLF), (District Court for
the District of Columbia 1999). This was the largest civil rights
case to settle in the United States in over 40 years. The highly
publicized, nation-wide paid media program was designed to alert all
present and past African-American farmers of the opportunity to
recover monetary damages against the U.S. Department of Agriculture
for alleged loan discrimination.
In his Opinion, the Honorable Paul L. Friedman commented on the
notice program by saying:
“The parties also exerted extraordinary efforts
to reach class members through a massive advertising
campaign in general and African American targeted
publications and television stations.”
Judge Friedman continued:
“The Court concludes that class members have
received more than adequate notice and have had
sufficient opportunity to be heard on the fairness of
the proposed Consent Decree.”
In re: SmithKline Beecham Clinical Billing Litigation,
Case No. CV. No. 97-L-1230 (Illinois Third Judicial District Madison
County, 2001.) Finegan designed and developed a national media and
Internet site notification program in connection with the settlement
of a nationwide class action concerning billings for clinical
laboratory testing services.
In re: MacGregor v. Schering-Plough Corp., Case No.
EC248041 (Superior Court of the State of California in and for the
County of Los Angeles 2001). This nationwide notification was
designed to reach all persons who had purchased or used an aerosol
inhaler manufactured by Schering-Plough. Because no mailing list was
available, notice was accomplished entirely through the media
program.
In re: Swiss Banks Holocaust Victim Asset Litigation
Case No. CV-96-4849, (Eastern District of New York 1999). Finegan
managed the design and implementation of the Internet site on this
historic case. The site was developed in 21 native languages. It is a
highly secure data gathering tool and information
The Garden City Group, Inc. # 105 Maxess Road # Melville. NY 11747-3836 /Page 29
hub, central to the global outreach program of Holocaust
survivors. (www.swissbankclaims.com/).
In re: Louisiana-Pacific Inner-Seal Siding Litigation,
Civil Action Nos. 879-JE, and 1453-JE U.S.D.C., (District of Oregon
1995 and 1999). Under the terms of the Settlement, three separate
Notice programs were to be implemented at three-year intervals over a
period of six years. In the first Notice campaign, Finegan
implemented the print advertising and Internet components of the
Notice program.
In approving the legal notice communication plan, the Honorable
Robert E. Jones stated:
“The notice given to the members of the Class
fully and accurately informed the Class members of
all material elements of the settlement... [through]
a broad and extensive multi-media notice campaign.”
In reference to the third-year Notice program for
Louisiana-Pacific, Special Master Hon. Judge Richard Unis, commented:
“In approving the third year notification plan
for the Louisiana-Pacific Inner-SeaP’M Siding
litigation, the court referred to the notice as
`...well formulated to conform to the definition set
by the court as adequate and reasonable notice. ‘
Indeed, I believe the record should also reflect
the Court’s appreciation to Ms. Finegan for all the
work she’s done, ensuring that noticing was done
correctly and professionally, while paying careful
attention to overall costs. “Her understanding of
various notice requirements under Fed. R. Civ. P. 23,
helped to insure that the notice given in this case
was consistent with the highest standards of
compliance with Rule 23(d)(2).
In re: Thomas A. Foster and Linda E. Foster v. ABTco Siding
Litigation. Case No. 95-151-M, (Circuit Court of Choctaw County,
Alabama 2000). This litigation focused on past and present owners of
structures sided with Abitibi-Price siding. The notice program that
Finegan designed and implemented was national in scope.
The Garden City Group, Inc. # 105 Maxess Road # Melville. NY 11747-3836 /Page 30
In the Order and Judgment Finally approving settlement, Judge J.
Lee McPhearson said:
“The Court finds that the Notice Program
conducted by the Parties provided individual notice
to all known Class Members and all Class Members who
could be identified through reasonable efforts and
constitutes the best notice practicable under the
circumstances of this Action. This finding is based
on the overwhelming evidence of the adequacy of the
notice program ... The media campaign involved broad
national notice through television and print media,
regional and local newspapers, and the Internet (see
id. ¶¶9-II) The result: over 90 percent of Abitibi
and ABTco owners are estimated to have been reached
by the direct media and direct mail campaign.”
In re: Exxon Valdez Oil Spill Litigation, Case No.
A89-095-CV (HRH) (Consolidated) U.S. District Court for the District
of Alaska (1997, 2002). Finegan designed and implemented two media
campaigns to notify native Alaskan residents, trade workers,
fisherman, and others impacted by the oil spill of the litigation and
their rights under the settlement terms.
In re: Georgia-Pacific Toxic Explosion Litigation Case
No. 98 CVCO5-3535, (Court of Common Pleas Franklin County, Ohio
2001). Finegan designed and implemented a regional notice program
that included network affiliate television, radio and newspaper. The
notice was designed to alert adults living near a Georgia-Pacific
plant that they had been exposed to an air-born toxic plume and their
rights under the terms of the class action settlement.
In the Order and Judgement finally approving the settlement the
Honorable Jennifer L. Bunner said:
”...Notice of the settlement to the Class was
the best notice practicable under the circumstances,
including individual notice to all members who can be
identified through reasonable effort. The Court finds
that such effort exceeded even reasonable effort and
that the Notice complies with the requirements of
Civ. R. 23(C).
The Garden City Group, Inc. # 105 Maxess Road # Melville. NY 11747-3836 /Page 31
In re: Johns Manville Phenolic Foam Litigation Case No.
CV 96-10069, (District Court for the District of Massachusetts 1999).
The nationwide multi-media legal notice program was designed to reach
all Persons who own any structure, including an industrial building,
commercial building, school, condominium, apartment house, home,
garage or other type of structure located in the United States or its
territories, in which Johns Manville PFRI was installed, in whole or
in part, on top of a metal roof deck.
In re: James Hardie Roofing Litigation Case No. CV. No.
00-2-17945-65SEA (Superior Court of Washington in and for King County
2002). The nationwide legal notice program included advertising on
television, in print and on the Internet. It was national in scope
and designed to reach all persons who own any structure with JHBP
roofing products.
In the Final Order and Judgement the Honorable Steven Scott
stated:
“The notice program required by the Preliminary
Order has been fully carried out.... [and was/
extensive. The notice provided fully and accurately
informed the Class Members of all material elements
of the proposed Settlement and their opportunity to
participate in or be excluded from it; was the best
notice practicable under the circumstances; was
valid, due and sufficient notice to all Class
Members; and complied fully with Civ. R. 23, the
United States Constitution, due process, and other
applicable law. “
In re: First Alert Smoke Alarm Litigation, Case No.
CV-98-C-1546-W (UWC), (District Court for the Northern District of
Alabama Western Division 2000). Finegan designed and implemented a
nationwide legal notice and public information program. The public
information program is scheduled to run over a two-year period to
inform those with smoke alarms of the performance characteristics
between photoelectric and ionization detection. The media program
includes network and cable television, magazine and specialty trade
publications.
In the Findings and Order Preliminarily Certifying the Class,
The Honorable C.W. Clemon wrote that the notice plan:
“...Constitutes due, adequate and sufficient
notice to all Class Members; and meets or exceeds all
applicable requirements of the Federal Rules of
The Garden City Group, Inc. # 105 Maxess Road # Melville. NY 11747-3836 /Page 32
Civil Procedure, the United States Constitution
(including the Due Process Clause), the Alabama State
Constitution, the Rules of the Court, and any other
applicable law.”
In re: American Cyanamid, Civil Action CV-97-0581-BH-M
United States District court for the Southern District of Alabama
2001. The media program targeted those Farmers who had purchased crop
protection chemicals manufactured by American Cyanamid.
In the Final Order and Judgment, the Honorable Charles R. Butler
Jr. wrote:
“The Court finds that the form and method of
notice used to notify the Temporary Settlement Class
of the Settlement satisfied the requirements of Fed.
R. Civ. P. 23 and due process, constituted the best
notice practicable under the circumstances, and
constituted due and sufficient notice to all
potential members of the Temporary Class Settlement.”
In re: Bristow v Fleetwood Enterprises Litigation Case
No Civ 00-0082-S-EJL (District Court for the District of Idaho 2001).
Finegan designed and implemented a legal notice campaign targeting
present and former employees of Fleetwood Enterprises, Inc., or its
subsidiaries who worked as hourly production workers at Fleetwood’s
housing, travel trailer, or motor home manufacturing plants. The
comprehensive notice campaign included print, radio and television
advertising.
In re: New Orleans Tank Car Leakage Fire Litigation,
Case No 87-16374. (Civil District Court for the Parish of Orleans,
State of Louisiana 2000). This case resulted in one of the largest
settlements in US History. This campaign consisted of a media
relations and paid advertising program to notify individuals of their
rights under the terms of the settlement.
In re: Garria Spencer v. Shell Oil Company, Case No. CV
94-074, District Court, Harris County Texas (1995). The nation wide
notification program was designed to reach individuals who owned real
property or structures in the United States which contained
polybutylene plumbing with acetyl insert or metal insert fittings.
The Garden City Group, Inc. # 105 Maxess Road # Melville. NY 11747-3836 /Page 33
In re: Rene Rosales v. Fortune Insurance Company, Case
No 99-04588 CA (41) Circuit Court of the 11th Judicial Circuit in and
for Miami-Dade County, Florida (2000). Finegan provided expert
testimony in this matter. She conducted an audit on behalf of
intervening attorneys for the proposed notification to individuals
insured with personal injury insurance. Based upon the audit, Ms.
Finegan testified that the proposed notice program was inadequate.
The Court agreed and signed an Order Granting Intervenors’
Objections to Class Action settlement...The Honorable Jose M.
Rodriques said:
“The Court finds that Ms. Finegan is qualified
as an expert on class notice and effective media
campaigns. The Court finds that her testimony is
credible and reliable.”
Based in part on Finegan’s testimony, the Court ruled in favor
of the intervening parties and disapproved the parties’ original
settlement agreement, vacating the order of preliminary approval.
In re: Hurd Millwork Heat Mirrorrm Litigation Case No.
CV-772488, (Superior Court of the State of California for the County
of Santa Clara 2000). This nationwide multi-media notice program was
designed to reach class members with failed heat mirror seals on
windows and doors, and alert them as to the actions that they needed
to take to receive enhanced warranties or window and door
replacement.
In re: Laborers District Counsel of Alabama Health and
Welfare Fund v Clinical Laboratory Services, Inc, Case No. CV
—97-C-629-W (Northern District of Alabama 2000.) Finegan designed
and developed a national media and Internet site notification program
in connection with the settlement of a nationwide class action
concerning alleged billing discrepancies for clinical laboratory
testing services.
In re: StarLink Corn Products Liability Litigation Case
No. 01 C 1181, (Northern District of Illinois, Eastern Division
2002). Finegan designed and implemented a nationwide notification
program designed to alert potential class members of the terms of the
settlement.
In re: Albertson’s Back Pay Litigation, Case No.
97-0159-S—BLW, U.S. District Court of Idaho (1997). Finegan designed
and developed a secure Internet site, where claimants could seek case
information confidentially.
The Garden City Group, Inc. # 105 Maxess Road # Melville. NY 11747-3836 /Page 34
In re: Georgia Pacific Hardboard Siding Recovering
Program, Case No. CV-95-3330-RG, Circuit Court for the County of
Mobile, State of Alabama (1997). Finegan designed and implemented a
multi-media legal notice program, which was designed to reach class
members with failed G-P siding and alert them of the pending matter.
Notice was provided through advertisements which aired on national
cable networks, magazines of nationwide distribution, local
newspaper, press releases and trade magazines.
In re: Diet Drug Litigation, Finegan has worked on many
state notification programs and worked as a consultant to the
National Diet Drug Settlement Committee on notification issues.
In re: ABS II Pipes Litigation, Case No. 3126, Contra
Costa Superior Court, State of California (1998 and 2001). The Court
approved regional notification program designed to alert those
individuals who owned structures with the pipe, that they were
eligible to recover the cost of replacing the pipe.
(www.abspipes.com/).
In re: Avenue A Inc. Internet Privacy Litigation
District Court for the Western District of Washington Case No:
COO-1964C.
In re: Lorazepam and Clorazepate Antitrust Litigation,
MDL No. 1290 (TFH) United States District Court for the District of
Columbia.
In re: Providian Financial Corporation ERISA Litigation
Case No C-01-5027 United States District Court for the Northern
District of California.
In re: H & R Block., et al Tax Refund Litigation State
of Maryland Circuit Court for Baltimore City Case No. 97195023/CC41
11
In re: American Premier Underwriters, Inc, U.S. Railroad
Vest Corp. Boone Circuit Court – Boone County, Indiana. Cause No:
06C01-9912
In re: Sprint Corporation Optical Fiber Litigation
District Court of Leavenworth Co, Kansas Case No: 9907 CV 284
In re: Shelter Mutual Insurance Company Litigation
District Court in and for Canadian Co. State of Oklahoma Case No.
CJ-2002-263
The Garden City Group, Inc. # 105 Maxess Road # Melville. NY 11747-3836 /Page 35
In re: Consecos Inc. Securities Litigation Southern
District of Indiana Indianapolis Division Case No: IP-00-0585-C Y/S
CA
In re: National Treasury Employees Union, et al United
States Court of Federal Claims Case No: 02-128C
In re: City of Miami Parking Litigation Circuit Court of
the 11 `h Judicial Circuit in and for Miami Dade County, Florida Case
Nos: 99-21456 CA-10, 99-23765 — CA-10.
In re: Prime Co. Incorporated DB/A/Prime Co. Personal
Communications, United States Court Eastern District of Texas
Beaumont Division — Civil Action No. L 1:01CV658.
In re: Alsea Veneer v. State of Oregon A.A., Case No.
88C-11289-88C-11300.
A Sample of Finegan’s Bankruptcy Experience —
Finegan has designed and implemented literally hundreds of domestic and
international bankruptcy notice programs. A sample case list includes the
following:
In re: United Airlines, Case No. 02-B-48191 (Bnkr. N.D
Illinois Eastern Division) Finegan worked with United and its
restructuring attorneys to design and implement global legal notice
programs. The notice was published in 11 countries and translated
into 6 languages. Finegan worked closely with legal counsel and UAL’s
advertising team to select the appropriate media and to negotiate the
most favorable advertising rates. (www.pd-ual.com/).
In re: Enron. Case No. 01-16034 (Bankr. S.D.N.Y.)
Finegan worked with Enron and its restructuring attorneys to publish
various legal notices.
In re: Dow Corning, Case No. 95-20512 (Banks. E.D.
Mich.) Finegan originally designed the information website. This
Internet site is a major information hub that has various forms in 15
languages.
In re: Harnischfeger Industries, Case No. 99-2171 (RJW)
Jointly Administered U.S. Bankr., District of Delaware. Finegan
designed and implemented 6 domestic and international notice programs
for this case. The notice was translated into 14 different languages
and published in 16 countries.
The Garden City Group, Inc. # 105 Maxess Road # Melville. NY 11747-3836 /Page 36
In re: Keene Corporation, Case No. 93B 46090 (SMB) U.S.
Bankr. Eastern District of Missouri, Eastern Division. Finegan
designed and implemented multiple domestic bankruptcy notice programs
including notice on the plan of reorganization directed to all
creditors and all Class 4 asbestos-related claimants and counsel.
In re: Lamonts, Case No. 00-00045 U.S. Bankr. Western
District of Washington. Finegan designed an implemented multiple
bankruptcy notice programs.
In re: Monet Group Holdings, Case Nos. 00-1936 (MFW)
U.S. Bankr. District of Delaware. Finegan designed and implemented a
bar date notice.
In re: Laclede Steel Company, Case No 98-53121-399 US
Bankr, CT, Eastern District of MO, Eastern Division. Finegan designed
and implemented multiple bankruptcy notice programs.
In re: Columbia Gas Transmission Corporation, Case No.
91-804 Bankr., Southern District of New York; Finegan developed
multiple nation-wide legal notice notification programs for this
case.
In re: U.S.H. Corporation of New York, et al., and (BRL)
Bankr. Southern District of New York; she designed and implemented a
bar date advertising notification campaign.
In re: Best Products Co., Inc., Bankr. Case No.
96-35267-T, Eastern District of Virginia; she implemented a national
legal notice program that included multiple advertising campaigns for
notice of sale, bar date, disclosure and plan confirmation.
In re: Lodzian, Inc., et al – Southern District Court of
New York Case No. 16345 (BRL) Factory Card Outlet – 99-685 (JCA),
99-686 (JCA)
In re: International Total Services, Inc., et al –
Eastern District Court of New York, Case No: 01-21812, 01-21818,
01-21820, 01-21882, 01-21824, 01-21826, 01-21827 (CD) Under Case No:
01-21812
In re: Decora Industries, Inc and Decora, Incorporated.
District of Delaware Case No: 00-4459 and 00-4460 (JJF)
In re: Genesis Health Ventures, Inc., et al — District
of Delaware Case No. 002692 (PJW)
The Garden City Group, Inc. # 105 Maxess Road # Melville. NY 11747-3836 /Page 37
In re: Telephone Warehouse, Inc., et al – District of
Delaware Case No. 00-2105 through 00-2110 (MFW)
In re: United Companies Financial Corporation, et al.,
District of Delaware Case No. 99-450 (MFW) through 99-461 (MFW)
In re: Caldor, Inc. New York, The Caldor Corporation,
Caldor, Inc, CT, et al. Southern District of New York Case No:
95-B44080 (JLG)
In re: Physicians Health Corporation, et al. District of
Delaware Case No: 00-4482 (MFW)
In re: GC Companies., et al. District of Delaware Case
Nos:00-3897 through 00-3927 (MFW)
In re: Heilij-Meyers Company, et al, Eastern District of
Virginia (Richmond Division) Case Nos: 00-34533 through 00-34538.
Product Recall and Crisis Communication
Reser’s Fine Foods – Reser’s is a nationally distributed
brand and manufacturer of food products through giants such as
Albertsons, Costco, Food Lion, WinnDixie, Ingles, Safeway and
Walmart. Finegan designed an enterprise wide crisis communication
plan that included communications objectives, crisis team roles and
responsibilities, crisis response procedures, regulatory protocols,
definitions of incidents that require various levels of notice,
target audiences, and threat assessment protocols. Finegan worked
with the company through two nationwide, high profile recalls,
conducting extensive media relations efforts.
Background
Prior to joining The Garden City Group, Inc., Finegan co-founded
Huntington Advertising, a nationally recognized leader in legal notice
communications. After Fleet Bank purchased her firm in 1997; she grew the
company into one of the nation’s leading legal notice communication
agencies.
Prior to that, Finegan spearheaded Huntington Communications, (an
Internet development company) and The Huntington Group, Inc., (a public
relations firm). As a partner and consultant, she has worked on a wide
variety of client marketing, research, advertising, public relations and
Internet programs. During her tenure at the Huntington Group, client
projects included advertising (media planning and buying), shareholder
The Garden City Group, Inc. # 105 Maxess Road # Melville. NY 11747-3836 /Page 38
meetings, direct mail, public relations (planning, financial
communications) and community outreach programs. Her past client list
includes large public and privately held companies: Code-A-Phone Corp.,
Thrifty-Payless Drug Stores, Hyster-Yale, The Portland Winter Hawks Hockey
Team, U.S. National Bank, U.S. Trust Company, Morley Capital Management, and
Durametal Corporation.
Prior to Huntington Advertising, Finegan worked as a consultant and
public relations specialist for a West Coast-based Management and Public
Relations Consulting firm.
Additionally, Finegan has experience in news and public affairs. Her
professional background includes being a reporter, anchor and public affairs
director for KWJJ/KJIB radio in Portland, Oregon, as well as reporter
covering state government for KBZY radio in Salem, Oregon. Finegan worked as
an assistant television program/promotion manager for KPDX directing $50
million in programming. Additionally she was the program/promotion manager
at and KECH-22 television.
Finegan’s multi-level communication background gives her a thorough,
hands-on understanding of media, the communication process, and how it
relates to creating effective and efficient legal notice campaigns.
Articles
Co-Author, “Approaches to Notice in State Court Class Actions,” –
For The Defense, Vol. 45, No. 11 — November, 2003.
Citation – “Recall Effectiveness Research: A Review and Summary of
the Literature on Consumer Motivation and Behavior” U.S. Consumer Product
Safety Commission,
CPSC-F-02-1391, p.10, Heiden Associates – July 2003.
Author, “The Web Offers Near, Real-Time Cost Efficient Notice,” –
American Bankruptcy Institute — ABI Journal, Vol. XXII, No. 5. — 2003.
Author, “Determining Adequate Notice in Rule 23 Actions,” – For The
Defense, Vol. 44, No. 9 — September, 2002,
Author, Legal Notice. What You Need To Know and Why, — Monograph, July 2002.
Co-Author, “The Electronic Nature of Legal Noticing,” — The American
Bankruptcy Institute Journal -Vol. XXI, No. 3, April 2002.
Author, “Three Important Mantras for CEO’s and Risk Managers in
2002” — International Risk Management Institute — irmi.com/ January
2002.
The Garden City Group, Inc. # 105 Maxess Road # Melville. NY 11747-3836 /Page 39
Co-Author, “Used the Bat Signal Lately” — The National Law Journal,
Special Litigation Section — February 19, 2001.
Author, “How Much is Enough Notice” — Dispute Resolution Alert, Vol.
1, No. 6. March 2001.
Author, “Monitoring the Internet Buzz” – The Risk Report, Vol.
XXIII, No. 5, Jan. 2001.
Author, “High-Profile Product Recalls Need More Than the Bat Signal”
— International Risk Management Institute — irmi.com/ July 2001.
Co-Author, “Do you know what 100 million people are buzzing about today?
Risk and Insurance Management – March 2001.
Quoted Article: “Keep Up with Class Action” Kentucky Courier Journal
– March 13, 2000.
Author, “The Great Debate — How Much is Enough Legal Notice?”
American Bar Association – Class Actions and Derivatives Suits Newsletter,
Winter edition 1999.
Speaker/Expert Panelist/Presenter
|
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Practicing Law Institute
|
|
Faculty Panelist — CLE
Presentation -11 m Annual Consumer
Financial Services Litigation.
Presentation: Class Action
Settlement Structures — Evolving
Notice Standards in the Internet
Age. New York/Boston (simulcast),
NY March 2006; Chicago, IL April
2006 and San Francisco, CA May
2006. |
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U.S. Consumer Product Safety Commission
|
|
Ms. Finegan participated as an
Expert to the Consumer Product
Safety Commission to discuss ways
in which the CPSC could enhance
and measure the recall process. As
an expert panelist, Ms Finegan
discussed how the CPSC could
better motivate consumers to take
action on recalls and how
companies could scientifically
measure and defend their outreach
efforts. Bethesda MD, September
2003. |
The Garden City Group, Inc. # 105 Maxess Road # Melville. NY 11747-3836 /Page 40
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Weil, Gotshal & Manges
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CLE presentation “ A Scientific
Approach to Legal Notice
Communication” New York, June
2003. |
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Sidley & Austin
|
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CLE presentation “A Scientific
Approach to Legal Notice
Communication” Los Angeles, May
2003. |
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Kirkland & Ellis
|
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Speaker to restructuring group
addressing “The Best Practicable
Methods to Give Notice in a Tort
Bankruptcy.” Chicago, April 2002. |
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Georgetown University Law Center Mass
Tort Litigation Institute
|
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CLE White Paper: What are the best
practicable methods to give
notice? Dispelling the
communications myth — A notice
disseminated is a notice
communicated. Faculty — Mass Tort Litigation Institute — Washington
D.C., November 1, 2001. |
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American Bar Association
|
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How to Bullet-Proof Notice
Programs and what communication
barriers present due process
concerns in legal notice.
Presentation to the ABA Litigation
Section Committee on Class Actions
& Derivative Suits — Chicago, IL,
August 6, 2001. |
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McCutchin, Doyle, Brown & Enerson
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Speaker to litigation group in San
Francisco and simulcast to four
other McCutchin locations,
addressing the definition of
effective notice and barriers to
communication that affect due
process in legal notice. San
Francisco, CA — June 2001. |
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Marylhurst University
|
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Guest lecturer on public relations
research methods. Portland, OR -
February 2001. |
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University of Oregon
|
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Guest speaker to MBA candidates on
quantitative and qualitative
research for marketing and
communications programs. Portland,
OR — May 2001. |
The Garden City Group, Inc. # 105 Maxess Road # Melville. NY 11747-3836 /Page 41
|
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Judicial Arbitration & Mediation
Services (JAMS)
|
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Speaker on the definition of effective notice. San Francisco
and Los Angeles, CA — June 2000. |
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International Risk Management Institute
|
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Expert Commentator on Crisis and
Litigation Communications.
www.irmi.com/ |
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The American Bankruptcy Institute
Journal (ABI)
|
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Past Contributing Editor — Beyond
the Quill. www.abi.org/. |
Memberships and Professional Credentials
APR — Accredited Public Relations — The Universal Board of Accreditation
Public Relations Society of America.
Member Portland Advertising Federation Member of the Public Relations
Society
The Garden City Group, Inc. # 105 Maxess Road # Melville. NY 11747-3836 /Page 42
GCG’s Sample Multi-National experience
In re Federal-Mogul Global Inc., No. 01-10578 (AMW) (Bankr. D. Del.
2003). The worldwide notice program for the Federal-Mogul Bankruptcy case
was published in 127 countries, 307 publications, and 69 languages. In
addition, the notice was published in 28 major publications in United
Kingdom and in 14 major publications in the United States.
(http://www.fmoplan.com/).
Complexities: The Class consisted of multiple sets of demographics; both
white collar and blue collar workers. We analyzed the media and media habits
of these populations in the involved countries and published the notice as
was necessary to reach both groups effectively. A four-tiered rationale was
tailored, so that notice was distributed in an effective manor. Countries
were assigned to a tier according to their level of business with Federal
Mogul.
In Re Western Union Monev Transfer Litig., Master File No. CV 01
0335 (CPS) (E.D.N.Y 2002). The court approved a worldwide settlement and
notice program. The Legal Notice was published in more than 160
publications, in more than 80 countries and in more than 20 languages, it is
one of the largest international notice programs ever.
(http://www.cruzlitigation.com/).
Complexities: The web site was developed in 20 native languages. This notice
program was developed after thorough analysis of the data relating to the
amount of and number of transactions conducted around the world.
Publications in countries were determined by the volume of money and
transactions both inbound from and outbound to the United States. For
example, when it was shown that a large amount of money was transferred from
the United States to Guatemala, ethnic publications catering specifically to
the Guatemalan populations in the United States were used. Also the reverse
was true, when large amounts of money were transferred to the United States
from other countries, we analyzed the widely circulated, well read
publications in those countries. This complex analysis and implementation
effectively reached all the targeted populations.
In re: Swiss Banks Holocaust Victim Asset Litigation Case No.
CV-96-4849, (E.D.N.Y. 1999). Finegan managed the design and implementation
of the Internet site. The site was developed in 21 native languages. It is a
highly secure data gathering tool and information hub, central to the global
outreach program of Holocaust survivors. The website can be viewed at
www.swissbankclaims.com/.
Complexities. The web site had to be developed in 21 native languages. The
site also had to be designed to work under the lowest common
The Garden City Group, Inc. # 105 Maxess Road # Melville. NY 11747-3836 /Page 43
browser. The site was tested across more than 100 different platforms so
that a wide range of visitors could easily access this site. Because of the
sensitive nature of the information collected on this site, extraordinary
security measures had to be established and actively managed to protect it
from intrusion and to this day cannot be fully disclosed.
At several points during the notice campaign the site was used as a platform
for real-time press conference coverage at four sites simultaneously. Press
conferences were held in New York, Tel Aviv, Paris and Budapest.
In re: Mexico Money Transfer Litigation Settlement, 164 F. Supp. 2d
1002 (N.D. I11.2000). (need to bring up the text)This case involved the
alleged failure of Western Union and Money Gram to pass along currency
conversion discounts to their customers and to post the currency conversion
rates in stores. GCG was extensively involved in helping the corporate
defendants identify settlement options and related costs.
(http://www.gardencitygroup.com/cases/pdf/WES/WESNotice.pdf)
Complexities: The challenges in this case were numerous in light of the
sheer volume of data from the money transfer companies (approximately 47
million records). GCG designed and formatted bilingual notices and claim
forms and implemented an extremely complex notice program that included
United States and Mexico radio, TV, and newspapers, as well as an 800-number
telephone support system in Mexico and the United States. Extensive tracking
and reporting of all activities was required for each of three defendants.
We recently implemented the claims phase of this settlement with the
completed mailing of over 5,000,000 claim forms. Once the processing of
claims is complete later this spring, we will begin mailing thousands of
coupons to approved claimants. As a follow-up to this settlement, we have
just recently initiated the notice phase of a settlement entitled Amorsolo
v. Western Union Financial Services, Inc. This case of over 3.2 million
California-only class members mimics the process described above. GCG is
responsible for implementing all phases of the settlement.
The Garden City Group, Inc. # 105 Maxess Road # Melville. NY 11747-3836 /Page 44
EXHIBIT B
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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In re NORTEL NETWORKS CORP.
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Civil Action No. 05-MD-1659 (LAP) |
SECURITIES LITIGATION
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CLASS ACTION |
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This Document Relates To:
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ALL ACTIONS.
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ORDER AND FINAL JUDGMENT
On the day of , 2006, a hearing having been held before this Court to
determine: (1) whether the terms and conditions of the Stipulation and Agreement of Settlement
dated , 2006 (the “Stipulation”) are fair, reasonable and adequate for the
settlement of all claims asserted by the U.S. Global Class against the Defendants in the Complaint
now pending in this Court under the above caption, including the release of the Defendants and the
Released Parties, and should be approved; (2) whether judgment should be entered dismissing the
Complaint on the merits and with prejudice in favor of the Defendants and as against all persons or
entities who are members of the U.S. Global Class herein who have not requested exclusion
therefrom; (3) whether to approve the Plan of Allocation as a fair and reasonable method to
allocate the settlement proceeds among the members of the U.S. Global Class; and (4) whether and in
what amount to award lead Plaintiffs’ Counsel fees and reimbursement of expenses. The Court having
considered all matters submitted to it at the
hearing and otherwise; and it appearing that a notice of the hearing substantially in the form
approved by the Court (including French language versions sent to addresses in Quebec, Canada) was
mailed to all persons or entities reasonably identifiable, who purchased common stock of Nortel
Networks Corporation (“Nortel”), or call options on Nortel common stock, or wrote (sold) put
options on Nortel common stock during the period between April 24, 2003 through April 27, 2004,
inclusive (the “Class Period”), except those persons or entities excluded from the definition of
the U.S. Global Class, as shown by the records of Nortel’s transfer agent, at the respective
addresses set forth in such records, and that a summary notice of the hearing substantially in the
form approved by the Court was published pursuant to the Notice Plan as set forth in the Affidavit
of , and the Court having considered and determined the fairness and reasonableness
of the award of attorneys’ fees and expenses requested by Lead Plaintiffs’ Counsel; and all
capitalized terms used herein having the meanings as set forth and defined in the Stipulation.
NOW, THEREFORE, IT IS HEREBY ORDERED THAT:
1. The Court has jurisdiction over the subject matter of the Action, the Lead Plaintiffs, all
U.S. Global Class Members, and the Defendants.
2. The Court finds that the prerequisites for a class action under (United States) Federal
Rules of Civil Procedure 23(a) and (b) (3) have been satisfied in that: (a) the number of U.S.
Global Class Members is so numerous that joinder of all members thereof is impracticable; (b) there
are questions of law and fact common to the U.S. Global Class; (c) the claims of the U.S. Global
Class Representatives are typical of the claims of the U.S. Global Class they seek to represent;
(d) the Class Representatives have and will fairly and adequately represent the interests of the
U.S. Global Class; (e) the questions of law and fact common to the members of
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the U.S. Global Class predominate over any questions affecting only individual member of the
U.S. Global Class; and (f) a class action is superior to other available methods for the fair and
efficient adjudication of the controversy.
3. Pursuant to Rule 23 of the (United States) Federal Rules of Civil Procedure this Court
hereby finally certifies this action as a class action on behalf of all persons and entities who
purchased Nortel common stock, or purchased call options on Nortel common stock, or wrote (sold)
put options on Nortel common stock (collectively, “Nortel Securities”) during the period between
April 24, 2003 through April 27, 2004, inclusive, and who suffered damages thereby, including, but
not limited to, those persons or entities who traded in Nortel Securities on the New York Stock
Exchange and/or the Toronto Stock Exchange. Excluded from the U.S. Global Class are (i) the
Defendants; (ii) James Kinney (Finance Chief for Nortel’s Wireless Networks Division, Richardson,
Texas), Ken Taylor (Vice President for Nortel’s Enterprise Networks Division, Raleigh, North
Carolina), Craig Johnson (Finance Director for Nortel’s Wireline Networks Division, Richardson,
Texas), Dough Hamilton (Finance Director for Nortel’s Optical Networks Group, Montreal, Quebec),
Michael Gasnier (Vice President of Finance for Europe), Robert Ferguson (Vice President of Finance
for China), and William Bowrey (Controller for Asia); (iii) members of the immediate family of each
of the Defendants and/or any of the individuals referenced above; (iv) any entity in which any
Defendant and/or any of the individuals referenced above has a controlling interest; (v) any
parent, subsidiary or affiliate of Nortel; (vi) any person who was an officer or director of Nortel
or any of its subsidiaries or affiliates during the Class Period; and (vii) the legal
representatives, heirs, predecessors, successors or assigns of any of the excluded persons or
entities. Also excluded from the U.S. Global Class for this Action are the person and/or entities
who have required
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exclusion from the U.S. Global Class by filing a request for exclusion as listed on Exhibit 1
annexed hereto.
4. Notice of the pendency of this Action as a class action and of the proposed Settlement was
given to all U.S. Global Class Members who could be identified with reasonable effort. The form
and method of notifying the U.S. Global Class of the pendency of the action as a class action and
of the terms and conditions of the proposed Settlement met the requirements of Rule 23 of the
(United States) Federal Rules of Civil Procedure, Section 21D(a)(7) of the (United States)
Securities Exchange Act of 1934, 15 U.S.C. 78u-4(a)(7), as amended, including by the (United
States) Private Securities Litigation Reform Act of 1995 (the “PSLRA”), Rule 23.1 of the Local
Rules of the Southern and Eastern Districts of New York, due process, and any other applicable law,
constituted the best notice practicable under the circumstances, and constituted due and sufficient
notice to all persons and entities entitled thereto.
5. The Settlement is approved as fair, reasonable and adequate. Subject to the terms and
provisions of the Stipulation and the conditions therein being satisfied, the parties are directed
to consummate the Settlement.
6. The Gross Settlement Shares are to be issued solely in exchange for bona fide outstanding
claims. All parties to whom it is proposed to issue such securities have had the right to appear
at the hearing on the fairness of the Settlement and adequate notice has been given to all such
parties. The Court recognized and acknowledged that one consequence of its approval of the
Settlement at the Settlement Fairness Hearing is that, pursuant to Section 3(a)(10) of the (United
States) Securities Act of 1933, as amended, 15 U.S.C. § 77c(a)(1), the Gross Settlement Shares may
be distributed to Class Members (and to Plaintiffs’ Counsel as may be awarded by
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the respective Courts for attorneys’ fees) without registration and compliance with the
prospectus delivery requirements of the U.S. securities laws as the Gross Settlement Shares will be
exempt from registration under the (United States) Securities Act of 1933, 15 U.S.C. § 77c(a)(1),
as amended, pursuant to Section 3(a)(10) thereunder. The Court also acknowledges that Nortel will
rely on such 3(a)(10) exemption (and Nortel will not register the Gross Settlement Shares under the
(United States) Securities Act of 1933) based on this Court’s approval of the fairness of the
Settlement.
7. The Complaint, which the Court finds was filed on a good faith basis in accordance with the
Private Securities Litigation Reform Act and Rule 11 of the (United States) Federal Rules of Civil
Procedure based upon all publicly available information, is hereby dismissed in its entirety with
prejudice and without costs, except as provided in the Stipulation, as against the Defendants.
8. Lead Plaintiffs and each U.S. Global Class Member who has not validly opted out, whether or
not such U.S. Global Class Member executes and delivers a Proof of Claim, on behalf of themselves,
their heirs, executors, administrators, successors and assigns, are hereby permanently barred and
enjoined from instituting, commencing or prosecuting any and all claims, debts, demands, rights or
causes of action or liabilities whatsoever (including, but not limited to, any claims for damages,
interest, attorneys’ fees, expert or consulting fees, and any other costs, expenses or liability
whatsoever), whether based on federal, state, provincial, local, statutory or common law or any
other law, rule or regulation, whether fixed or contingent, accrued or un-accrued, liquidated or
un-liquidated, at law or in equity, matured or un-matured, whether class or individual in nature,
including both known claims and Unknown Claims, (i) that have been asserted in this Action by the
U.S. Global Class Members or any of them against any
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of the Released Parties, or (ii) that could have been asserted in any forum by the U.S. Global
Class Members or any of them against any of the Released Parties which arise out of or are based
upon the allegations, transactions, facts, matters or occurrences, representations or omissions
involved, set forth, or referred to in the Complaint and which relate to the purchase of Nortel
common stock or call options on Nortel common stock or the sale of put options on Nortel common
stock during the Class Period, or (iii) any oppression or other claims under the Canada Business
Corporations Act, R.S.C. 1985, c. C-44, as amended, that arise out of or are based upon the
allegations, transactions, facts, matters or occurrences, representations or omissions during the
Class Period, set forth or referred to in the Nortel II Actions, (the “Settled Claims”), against
any and all of the Defendants, their past or present subsidiaries, parents, principal, affiliates,
general or limited partners or partnerships, successors and predecessors, heirs, assigns,
officers, directors, agents, employees, attorneys, advisors, investment advisors, investment
bankers, underwriters, insurers, co-insurers, re-insurers, attorneys, accountants, auditors,
consultants, administrators, executors, trustees, personal representatives, immediate family
members and any person, firm, trust, partnership, corporation, officer, director or other
individual or entity in which any Defendant has a controlling interest or which is related to or
affiliated with any of the Defendants, and the legal representatives, heirs, executors,
administrators, trustees, successors in interest or assigns of the Defendants (the “Released
Parties”); provided, however, that “Settled Claims” does not mean or include (a) claims, if any,
against the Released Parties arising under the (United States) Employee Retirement Income Security
Act of 1974, as amended, 29 U.S.C. §1001, et seq. (“ERISA”) which are not common to all U.S. Global
Class Members and which are the subject of an action pending before the Judicial Panel on
Multidistrict Litigation, denominated In re Nortel Networks Securities and “ERISA” Litigation, MDL
Docket No. 1537;
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(b) the action in Rohac, et al. v. Nortel Networks Corporation, et al., Court File No.
04-CV-3268 (Ont. Sup. Ct. J.); and (c) the application brought in Indiana Electrical Workers
Pension Trust Fund IBEW and Laborers Local 100 and 397 Pension Fund v. Nortel Networks Corporation,
Ontario Superior Court of Justice, Court File No. 49059, for leave pursuant to the Canada Business
Corporations Act to commence a representative action in the name of and on behalf of Nortel against
certain of the Released Parties (the “Derivative Application”). Each U.S. Global Class Member who
has not validly opted out has fully, finally, and forever released, relinquished, and discharged
all Settled Claims against the Released Parties and each such U.S. Global Class Member is bound by
this judgment, including without limitations, the release of claims as set forth in the
Stipulation. The Settled Claims are hereby compromised, settled, released, discharged and
dismissed as against the Released Parties on the merits and with prejudice by virtue of the
proceedings herein and this Order and Final Judgment.
9. Defendants Nortel, John Edward Cleghorn, Robert Ellis Brown, Robert Alexander Ingram,
Guylaine Saucier, and Sherwood Hubbard Smith, Jr., and the successors and assigns of any of them,
are hereby permanently barred and enjoined from instituting, commencing or prosecuting any and all
claims, rights or causes of action or liabilities whatsoever, whether based on federal, state,
provincial, local, statutory or common law or any other law, rule or regulation, including both
known claims and unknown claims, that have been or could have been asserted in the Action or any
forum by the Defendants or any of them or the successors and assigns of any of them against any of
the Lead Plaintiffs, U.S. Global Class Members or their attorneys, which arise out of or relate in
any way to the institution, prosecution, or settlement of the Action (except for claims to enforce
the Settlement, confidentiality obligations or in respect of the Derivative Application) (the
“Settled Defendant’s Claims”). The Settled Defendants’ Claims of
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all the Released Parties are hereby compromised, settled, released discharged and dismissed on
the merits and with prejudice by virtue of the proceedings herein and this Order and Final
judgment. In the event that any of the Released Parties asserts against the Lead Plaintiff, any
U.S. Global Class Member or their respective counsel, any claim that is a Settled Defendants’
Claim, then Lead Plaintiff, such U.S. Global Class Member or counsel shall be entitled to use and
assert such factual matters included within the Settled Claims only against such Released Party in
defense of such claim but not for the purposes of asserting any claim against any Released Party.
10. Pursuant to the PSLRA, the Released Parties are hereby discharged from all claims for
contribution by any person or entity other than by Released Parties, whether arising under state,
provincial, federal or common law, based upon, arising out of, relating to, or in connection with
the Settled Claims of the U.S. Global Class or any U.S. Global Class Member. Accordingly, to the
full extent provided by the PSLRA, the Court hereby bars all claims for contribution: (a) against
the Released Parties by any persons or entity other than the Released Parties; and (b) by the
Released Parties against any person or entity other than the Released Parties.
11. Neither this Order and Final Judgment, the Stipulating, nor any of its terms and
provisions, nor any of the negotiations or proceedings connected with it, nor any of the documents
or statements referred to therein shall be:
(a) offered or received against the Defendants as evidence of or construed as or deemed to be
evidence of any presumption, concession, or admission by any of the Defendants with respect to the
truth of any fact alleged by any of the plaintiffs or the validity of any claim that has been or
could have been asserted in the Action or in any litigation, or the
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deficiency of any defense that has been or could have been asserted in the Action or in any
litigation, or of any liability, negligence, fault, or wrongdoing of the Defendants;
(b) offered or received against the Defendants as evidence of a presumption, concession or
admission of any fault, misrepresentation or omission with respect to any statement or written
document approved or made by any Defendant;
(c) offered or received against the Defendants as evidence of a presumption, concession or
admission with respect to any liability, negligence, fault or wrongdoing, or in any way referred to
for any other reason as against any of the Defendants, in any other civil, criminal or
administrative action or proceeding, other than such proceedings as may be necessary to effectuate
the provisions of the Stipulation; provided, however, that Defendants may refer to it to effectuate
the liability protection grate them hereunder;
(d) construed against the Defendants as an admission or concession that the consideration to
be given hereunder represents the amount which could be or would have been recovered after trial;
or
(e) construed as or received in evidence as an admission, concession or presumption against
Lead Plaintiffs or any of the U.S. Global Class Members that any of their claims are without merit,
or that any defenses asserted by the Defendants have any merit, or that damages recoverable under
the Complaint would not have exceeded the Gross Settlement Fund.
12. The Plan of Allocation is approved as fair and reasonable, and Plaintiffs’ Counsel and the
Claims Administrator are directed to administer the Stipulation in accordance with its terms and
provisions.
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13. The Court finds that all parties and their counsel have complied with each requirement of
Rule 11 of the (United States) Federal Rules of Civil Procedure as to all proceedings herein.
14. Lead Plaintiffs’ Counsel in this Action are hereby awarded attorneys’ fees in the amount
of % of the Gross Cash Settlement Fund (net of litigation expenses awarded in the nest
sentence), and ___% of the Gross Settlement Shares, which amounts the Court finds to be fair and
reasonable. Lead Plaintiffs’ Counsel are hereby awarded $ in reimbursement of
expenses, which expenses shall be paid to Plaintiffs’ Lead Counsel from the Gross Cash Settlement
Fund with interest from the date such Gross Cash Settlement Fund was funded to the date of payment
at the same net rate that the Gross Cash Settlement Fund earns. The award of attorneys’ fees shall
be allocated among plaintiffs’ counsel in a fashion which, in the opinion of Plaintiffs’ Lead
Counsel, fairly compensates such counsel for their respective contributions in the prosecution and
settlement of the Action.
15. The fees and expenses of plaintiffs’ counsel in the Canadian Actions, as determined by the
Canadian Courts shall be paid from the Gross Settlement Fund.
16. Lead Plaintiff Ontario Teachers’ Pension Plan Board is hereby awarded $ ,
and the Department of the Treasury of the State of New Jersey and its Division of Investment is
hereby awarded $ . Such awards are for reimbursement of their reasonable costs
and expenses (including lost wages) directly related to its representation of the U.S. Global
Class.
17. In making this award of attorneys’ fees and reimbursement of expenses to be paid from the
Gross Settlement Fund, the Court has considered and found that:
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(a) the Settlement has created a cash fund of $370,157,428 that is already on deposit earning
interest, and will also provide from the benefit of the Class 314,333,875 shares of Nortel common
stock;
(b) the Settlement will entitle the Class to receive one-quarter of any actual gross recovery
by Nortel in the existing litigation by Nortel against Frank Dunn, Douglas Beatty and Michael
Gollogly (including the value of any monetary benefit that Nortel might receive from the defendants
by way of forgiveness or cancellation of any monetary debt owed by Nortel to such defendants),
excluding attorneys’ fees and expenses warded by the court, if any;
(c) Nortel has agreed to adopt the corporate governance enhancements described in Appendix A
to Tab 1 to Exhibit A of the Stipulation;
(d) Over copies of the Notice were disseminated to putative Class Members indicating
that Lead Plaintiffs’ Counsel were moving for attorneys’ fees in the amount of up to 10% of the
Gross Settlement Fund less litigation expenses awarded by the Court, and for reimbursement of
expenses in an amount of approximately $4.3 million, and [ ] objections were filed
against the terms of the proposed Settlement or the ceiling on the fees and expenses requested by
Lead Plaintiffs’ Counsel contained in the Notice;
(e) Lead Plaintiffs’ Counsel have conducted the litigation and achieved the Settlement with
skill, perseverance and diligent advocacy;
(f) The action involves complex factual and legal issues and was actively prosecuted over 2
years and, in the absence of a settlement, would involve further lengthy proceedings with uncertain
resolution of the complex factual and legal issues;
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(g) Had Lead Plaintiffs’ Counsel not achieved the Settlement there would remain a significant
risk that Lead Plaintiffs and the Class may have recovered less or nothing from the Defendants;
(h) Lead Plaintiffs’ Counsel have devoted over hours, with a lodestar value of
$ , to achieve the Settlement; and
(i) The amount of attorneys’ fees awarded and expenses reimbursed from the Settlement Fund are
fair and reasonable and consistent with awards in similar cases.
18. Any appeal or any challenge affecting the approval of (a) the Plan of Allocation submitted
by Lead Plaintiffs’ Counsel and/or (b) this Court’s approval regarding any attorneys’ fees and
expense application shall in no way disturb or affect the finality of the other provisions of this
Final Judgment.
19. Jurisdiction is hereby retained over the parties and the U.S. Global Class Members for all
matters relating to this Acting, including the administration, interpretation, effectuation or
enforcement of the Stipulation and this Order and Final Judgment, and including any application for
fees and expenses incurred in connection with administering and distributing the settlement
proceeds to the members of the U.S. Global Class.
20. In the event that the Settlement does not become final in accordance with the terms of the
Stipulation, or is terminated pursuant to ¶ 27 of the Stipulation, this judgment shall be rendered
null and void to the extent provided by and in accordance with the Stipulation and shall be vacated
and in such event all orders entered and released by and in accordance with the Stipulation.
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21. Without further order of the Court, the parties may agree to reasonable extensions of time
to carry out any of the provisions of the Stipulation.
22. There is no just reason for delay in the entry of this Order and Final Judgment and
immediate entry by the Clerk of the Court is expressly directed pursuant to Rule 54(b) of the
(United States) Federal rules of Civil Procedure.
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Dated:
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New York, New York |
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, 2006 |
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[Insert Judge Name: Honorable ]
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UNITED STATES DISTRICT JUDGE |
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Confidential Portions omitted and filed separately with the Securities and Exchange Commission. Bullet points denote omissions.
EXHIBIT C
SUPPLEMENTAL AGREEMENT – NORTEL II
Pursuant to ¶ 23 of the Nortel II Stipulation and Agreement of Settlement dated June 20, 2006
(the “Stipulation”) between Lead Plaintiffs and Nortel in In re Nortel Networks Corp. Securities
Litigation, Master File No. 05-MD-1659 (LAP), as also adopted and ratified by Canadian Class
Counsel in the Nortel Il Canadian Actions, the terms under which Nortel may withdraw from and
terminate the Stipulation are as follows:
1. All capitalized terms used, but not defined herein, shall have the meanings ascribed to
them in the Stipulation.
2. Nortel shall have the option, but not the obligation, to terminate the Settlement in the
event that the aggregate number of shares of Nortel common stock purchased during the Class Period
by Class Members who would otherwise be entitled to participate as members of the Class, but who
timely and validly request exclusion, equals or exceeds [•] (the “Opt-out Threshold”) of the total
number of shares of Nortel common stock purchased during the Class Period.
3. Nortel shall further have the option, but not the obligation, to terminate the Settlement
in the event that the aggregate number of shares of Nortel common stock purchased during the Nortel
I Class Period by members of the Nortel 1 Class who would otherwise be entitled to participate as
members of the Nortel I Class, but who timely and validly request exclusion, equals or exceeds [•]
of the total number of shares of Nortel common stock purchased during the Nortel I Class Period.
- 1 -
Confidential Portions omitted and filed separately with the Securities and Exchange Commission. Bullet points denote omissions.
4. It is expressly understood and agreed that, for the purposes of calculating the Opt-out
Threshold in ¶ 3, the only persons and entities who will be included in the calculation are those
persons and entities who are Class Members, excluding those persons or entities who previously
requested exclusion in response to the Notice of Pendency, as listed on Tab I to Exhibit B annexed
to the Nortel I Stipulation, whether or not they are Class Members.
5. Lead Plaintiffs and Nortel, with the cooperation of Canadian Class Counsel, shall make
every effort to ensure that the first settlement fairness hearing in any of the Nortel II Actions
shall be scheduled no earlier than fifteen (15) calendar days after the last date for exclusion in
any of the Nortel II Actions.
6. Subject to the dates for exclusion and the terms of ¶ 5, the Preliminary Approval Order
shall provide that requests for exclusion shall be received at least fifteen (15) calendar days
prior to the date of the Settlement Fairness Hearing before the United States District Court for
the Southern District of New York (“U.S. Settlement Fairness Hearing”) specified in the Notice.
Upon receiving any request(s) for exclusion pursuant to the Notice, the Claims Administrator shall
promptly (or in no event fewer than ten (10) calendar days prior to the U.S. Settlement Fairness
Hearing date) notify Plaintiffs’ Counsel and Nortel’s Counsel of such request(s) for exclusion.
Upon receiving any request(s) for exclusion pursuant to the Notice, Nortel’s Counsel shall promptly
notify Plaintiffs’ Counsel and the Claims Administrator of such request(s) for exclusion.
7. If Nortel elects to exercise either of the options set forth in ¶ 2 or ¶ 3 hereof, written
notice of such election must be provided to Plaintiffs’ Counsel at least five (5) calendar days
prior to the U.S. Settlement Fairness Hearing.
- 2 -
Confidential Portions omitted and filed separately with the Securities and Exchange Commission. Bullet points denote omissions.
8. In the event that Nortel files a written notice of its intent to terminate the Settlement
pursuant to ¶ 7 hereof, Nortel may withdraw its election by providing written notice of such
withdrawal to Plaintiffs’ Counsel no later than 5:00 P.M. Eastern Time on the day prior to the U.S.
Settlement Fairness Hearing, or by such later time as shall be agreed upon in writing as between
Lead Plaintiffs’ Counsel and Nortel’s Counsel, on notice to Canadian Class Counsel.
9. If Nortel elects to withdraw from the Stipulation pursuant to ¶ 2 or ¶ 3 hereof,
Plaintiffs’ Counsel may, within five (5) calendar days of receipt of such notice of intention to
withdraw from the Settlement (or such longer period as shall be agreed upon in writing between Lead
Plaintiff’s Counsel and Nortel’s Counsel), review the validity of any request for exclusion. and
may attempt to cause retraction or withdrawal of any such request for exclusion. If, within the
five (5) calendar day period (or longer period agreed upon in writing), Plaintiffs’ Counsel succeed
in causing the filing of retractions or withdrawals (which retractions and withdrawals shall be in
form and substance acceptable to Nortel’s Counsel) of a sufficient number of requests for exclusion
such that the number of shares represented by the remaining requests for exclusion does not
constitute grounds for withdrawal as specified in ¶ 2 or ¶ 3 above, then any withdrawal from the
Stipulation by Nortel shall automatically be deemed to be a nullity. To retract or withdraw a prior
request for exclusion, a Class Member or member of the Nortel II class must file a signed written
notice with either the United States District Court for the Southern District of New York or, in
the case of Canadian Class Members, the Canadian Court that certified the Canadian Class to which
the Class Member belongs, stating that the person or entity retracts or withdraws his, her or its
request for exclusion and that the person or entity agrees to be bound by the Settlement and the
Judgments in these Nortel II or Nortel I Actions as the case may be;
- 3 -
Confidential Portions omitted and filed separately with the Securities and Exchange Commission. Bullet points denote omissions.
provided, however, that the filing of such written notice signed by the Class Member or member
of the Nortel II class may be effected by Plaintiffs’ Counsel on written direction by the Class
Member or member of the Nortel II Class. Upon receipt of such written notice from such a Class
Member or member of the Nortel II class, Plaintiffs’ Counsel shall provide a copy of such written
notice to Nortel’s Counsel.
10. If Nortel elects to withdraw from the Stipulation in accordance with ¶ 2 or ¶ 3 of this
Supplemental Agreement and such withdrawal is not nullified in accordance with ¶ 8 of this
Supplemental Agreement, the Stipulation shall be withdrawn and terminated and deemed null and void,
and the provisions of ¶ 28 of the Stipulation shall apply.
11. The Parties intend that the Opt-out Threshold in this Supplemental Agreement be maintained
as confidential. Subject to orders of the Courts, the Supplemental Agreement shall not be filed
with the Courts in such a manner so as to disclose publicly the Opt-out Threshold itself prior to
the deadline for submitting requests for exclusion unless a dispute arises as to its terms.
Notwithstanding the foregoing, the Opt-out Threshold may be disclosed to the Courts, as may be
required by the Courts, for purposes of approval of the Settlement, but such disclosure shall be
carried out to the fullest extent possible in accordance with the practices of the respective
Courts so as to maintain the confidentiality of the Opt-out Threshold.
- 4 -
Confidential Portions omitted and filed separately with the Securities and Exchange Commission. Bullet points denote omissions.
DATED: June 20, 2006
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BERNSTEIN LITOWITZ BERGER & GROSSMANN LLP |
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By:
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/s/ Max W. Berger |
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Max W. Berger (MB 5010) |
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John P. Coffey (JC-3832) |
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Jeffrey N. Leibell (JL-1356) |
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1285 Avenue of the Americas |
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New York, New York 10019 |
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Telephone: (212) 554-1400 |
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Facsimile: (212) 554-1444 |
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Lead Plaintiffs’ Counsel |
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SHEARMAN & STERLING LLP |
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By:
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/s/ Stuart J. Baskin |
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Stuart J. Baskin (SB-9936) |
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Tai H. Park (TP-2607) |
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Marc D. Ashley (MA-8896) |
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599 Lexington Avenue |
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New York, New York 10022-6069 |
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Telephone: (212) 848-4000 |
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Facsimile: (212) 848-7179 |
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Nortel’s Counsel |
- 5 -
EXHIBIT D
Court File No. 05-CV-285606CP
ONTARIO
SUPERIOR COURT OF JUSTICE
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THE HONOURABLE SENIOR REGIONAL
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DAY, THE DAY |
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JUSTICE WINKLER
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OF , 2006 |
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BETWEEN:
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PETER GALLARDI
Plaintiff
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NORTEL NETWORKS CORPORATION, FRANK A. DUNN
DOUGLAS BEATTY, MICHAEL GOLLOGLY,
JOHN EDWARD CLEGHORN, ROBERT ELLIS BROWN,
ROBERT ALEXANDER INGRAM, GUYLAINE SAUCIER,
SHERWOOD HUBBARD SMITH, JR. AND DELOITTE & TOUCHE LLP
Defendants
Proceedings under the Class Proceeding Act, 1992
ORDER
THIS MOTION made by the Plaintiff for an Order certifying this action •s a class proceeding
for the purpose of settlement, approving the notice to class members ;rid other declaratory relief
was heard this day at the Court House, 361 University Avenue, Toronto, Ontario.
ON READING the materials filed, including the Settlement Agreement (defined herein), and on
hearing the submissions of counsel for the Plaintiff and counsel for the Defendants:
1. THIS COURT ORDERS AND DECLARES that for the purposes of this order the following definitions
apply and are incorporated into this Order:
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(a) |
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“Claims Administrator” means the entity approved by this Court pursuant to
paragraph 10 herein to administer the Settlement; |
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(b) |
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“Class Members” means members of the Ontario National Class, he Quebec Class
and the U.S. Global Class; |
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(c) |
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“Class Period” means the period of time between April 24, 2003 through April
27, 2004, inclusive; |
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(d) |
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“Courts” means this Court, the Supreme Court of British Columbia and the United
States District Court for the Southern District of New York; |
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(e) |
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“Defendants” means the persons and entities named as defendants in the Ontario
National Action; |
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(f) |
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“Escrow Agent” has the meaning set forth in the Stipulation; |
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(g) |
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“Excluded Persons” means: (i) Nortel and the Individual Defendants; (ii) the
Other Individuals; (iii) members of any of the Individual Defendants’ immediate
families; (iv) any entity in which Nortel or any of the Individuals Defendants or the
Other Individuals has a controlling interest; (v) any parent, subsidiary or affiliate
of Nortel; (vi) any person who was an officer or directors of Nortel or any of its
subsidiaries or affiliates during the Class Period; and (vii) legal representatives,
heirs, predecessors, successors or assigns of any of the Excluded Persons; |
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(h) |
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“Gross Cash Settlement Fund” has the meaning set forth in the Stipulation; |
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(i) |
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“Gross Settlement Fund” has the meaning set forth in the Stipulation; |
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(j) |
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“Gross Settlement Shares” means 314,333,875 shares of common stock of Nortel to
be issued by Nortel, pursuant to the Settlement, as may b adjusted in accordance with
paragraph 4(d) of the Stipulation; |
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(k) |
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“Individual Defendants” means Frank A. Dunn, Douglas Beatty, Michael Gollogly,
John Edward Cleghorn, Robert Ellis Brown, Robert Alexander Ingram, Guylaine Saucier and
Sherwood Hubbard Smith, Jr.; |
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(l) |
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“Nortel” means the Defendant, Nortel Networks Corporation; |
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(m) |
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“Nortel II Actions” means the Ontario National Action, the Quebec Action, and
the U.S. Action; |
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(n) |
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“Nortel II Defendants” means Nortel, the Individual Defendants and Deloitte &
Touche LLP; |
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(o) |
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“Notice” means the notice to the class in the Nortel II Actions, substantially
in the form attached as Schedule “B” to this Order; |
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(p) |
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“Notice Plan” means the plan for the publication and dissemination of the
Notice, Publication Notice and Proof of Claim by the Claims Administrator, attached as
Schedule “E” to this Order; |
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(q) |
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“Ontario National Action” means this proceeding which raises claims in the
nature of negligence, negligent and/or reckless misrepresentation, and alleges breaches
of the Canada Business Corporations Act, Competition Act and Ontario Securities Act,
for which relief is sought through an award of damages; |
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(r) |
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“Ontario National Class” means the class certified for the purpose of
settlement in the Ontario National Action pursuant to paragraph 3 of this Order; |
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(s) |
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“Ontario National Class Counsel” means Rochon Genova LLP ad Lerners LLP; |
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(t) |
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“Ontario National Class Counsel Fees” means the fees, disbursements, costs,
GST, and other applicable taxes or charges of Ontario National Class Counsel; |
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(u) |
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“Ontario National Class Member” means a member of the Ontario National Class
who does not opt out of the Ontario National Class in the manner set forth in this
Order; |
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(v) |
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“Other Individuals” means James Kinney (Finance Chief for Nortel’s Wireless
Networks Division, Richardson, Texas), Ken Taylor (Vice President for Nortel’s
Enterprise Networks Division, Raleigh, North Carolina), Craig Johnson (Finance Director
for Nortel’s Wireline Networks Division, Richardson, Texas), Doug Hamilton (Finance
Director for Nortel’ 5 Optical Networks Group, Montreal, Quebec), Michel Gasnier (Vice
President of Finance for Europe), Robert Ferguson (Vice President of Finance for
China), and William Bowrey (Controller for Asia); |
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(w) |
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“Proof of Claim” means the form substantially in the form attached as Schedule
“C” to this Order; |
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(x) |
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“Publication Notice” means the summary notice of certification and proposed
settlement, and of the hearing of the Settlement Approval Motion, substantially in the
form attached as Schedule “D” to this Order; |
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(y) |
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“Representative Plaintiffs” means, collectively, the representative : or lead
plaintiffs in each of the Nortel II Actions; |
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(z) |
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“Quebec Action” means the proceeding in the Superior Court of Quebec (District
of Montreal), Clifford W. Skarstedt v. Corporation Nortel Networks, No.
500-06-000277-059; |
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(aa) |
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“Quebec Class” means all persons and “entities”, except Excluded Persons who,
while resident in Quebec at the time, purchased Nortel common stock or call options on
Nortel common stock or wrote (sold) put options on Nortel common stock during the Class
Period. For purposes of the definition of Quebec Class, an |
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entity means a legal person established for a private interest, a partnership or an
association if at all times during the 12-month period preceding February 18, 2005,
not more than 50 persons bound to it by contract of employment were under its
direction or control and if it s dealing at arm’s length with the representative of
the Quebec Class; |
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(bb) |
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“Released Parties” means any and all of the Nortel II Defendants, their past or
present subsidiaries, parents, principals, affiliates, general o- limited partners or
partnerships, successors and predecessors, heirs, assigns, officers, directors, agents,
employees, attorneys, advisors, investment ‘advisors, investment bankers, underwriters,
insurers, co-insurers, re-insurers, accountants, auditors, consultants, administrators,
executors, trustees, personal representatives, immediate family members and any person,
firm, trust, partnership, corporation, officer, director or other individual or entity
in which any Nortel II Defendant has a controlling interest or which is related to or
affiliated with any of the Nortel II Defendants, and the legal representatives, heirs,
executors, administrators, trustees, successors in interest or assigns of the Nortel II
Defendants; |
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(cc) |
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“Settled Claims” means any and all claims, debts, demands, rights Br causes of
action, suits, matters, and issues or liabilities whatsoever (including, but not
limited to, any claims for damages, interest, attorneys’ fees, expert or consulting
fees, and any other costs, expenses or liability whatsoever) whether based on United
States or Canadian federal, state, provincial, local, statutory or common law or any
other law, rule or regulation, whether fixed or contingent, accrued or unaccrued,
liquidated or unliquidated, at law or in equity, matured or un-matured, whether class
or individual in nature, including both known claims and Unknown Claims, (i) that have
been asserted in any of the Nortel II Actions against any of the Released Parties, or
(ii) that could have been asserted in any forum by the Class Members in the Nortel II
Actions, or any of them, against any of the Released Parties, that arise out of or • e
based upon the allegations, transactions, facts, matters or occurrences,
representations or omissions involved, set forth, or referred to in the Nortel II
Actions and that relate to the purchase of Nortel common stock or ca I options or the
sale of Nortel put options during the Class Period or (iii) any oppression or other
claims under the Business Corporations Act, R.S.C. 1985, c. C44, as amended, that arise
out of or are based upon the allegations, transactions, facts, matters or occurrences,
representations or omissions, set forth or referred to in the Nortel II Actions.
“Settled Claims” does not mean or include claims, if any, against the Released Parties:
(a) arising under the United States Employee Retirement Income Security Act of 1974, as
amended, 29 U.S.C. § 1001, et seq. (“ERISA”) that are not common to all Class Members
and which ERISA claims are the subject of an action pending before the Judicial Panel
on Multidistrict Litigation, denominated In re Nortel Networks Securities and “ERISA’
Litigation, MDL Docket No. 1537. “Settled Claims” further does not include: (a) the
action in Rohac et al v. Nortel Networks et al, Ontario Superior Court of Justice,
Court File No. 04-CV-3268; and (b) the application brought in Indiana Electrical
Workers Pension Trust Fund IBEW and Laborers Local 100 and 397 Pension Fund v. Nortel
Networks Corporation, Ontario |
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Superior Court of Justice, Court File No. 49059, for leave pursuant to the Canada
Business Corporations Act to commence a representative action in the name of and on
behalf of Nortel against certain of the Released Parties; |
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(dd) |
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“Settlement Agreement” means the Settlement Agreement and Confirmation of
Stipulation and Agreement of Settlement, including the Stipulation attached as Schedule
“A” thereto, entered into between the Plaintiffs and Norel, dated June 20, 2006, which
is attached to this Order as Schedule “A”; |
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(ee) |
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“Settlement” means the proposed settlement of the Nortel II Actions pursuant to
the terms set forth in the Settlement Agreement adopting and ratifying the Stipulation; |
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(ff) |
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“Settlement Approval Motion” means the motion for final approval of the
Settlement by this Court to be heard at the date, time and location described in
paragraph 6 of this Order; |
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(gg) |
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“Stipulation” means the Stipulation and Agreement of Settlement attached to the
Settlement Agreement as Schedule “A”; |
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(hh) |
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“Supplemental Agreement” means the agreement referred to in paragraph 23 of the
Stipulation setting forth certain conditions under which the Settlement may be
terminated by Nortel if potential Class Members who purchase in excess of a certain
number of Nortel common stock or options on Nortel common stock during the Class Period
exclude themselves from the Class; |
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(ii) |
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“Unknown Claims” means any and all Settled Claims which a y of the
Representative Plaintiffs, or Class Members does not know or suspect to exist in his,
her or its favour at the time of the release of the Released Parties which if known by
him, her or it might have affected his, her or its decision(s) with respect to the
Settlement; |
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(jj) |
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“U.S. Action” means the proceeding in the U.S. Federal District Court for the
Southern District of New York, Master File No. 05-MD-1659 (LAP); |
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(kk) |
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“U.S. Global Class” means all persons, except Excluded Persons, who purchased
Nortel common stock or call options on Nortel common stock or wrote (sold) put options
on Nortel common stock (collectively, “Norte) Securities”) during the Class Period, and
who suffered damages thereby, including, but not limited to, those persons or entities
who traded in Nortel Securities on the New York Stock Exchange and/or the Toronto Stock
Exchange. |
2. THIS COURT ORDERS that the Ontario National Action be certified as a class proceeding for the
purpose of settlement.
3. THIS COURT ORDERS that the Ontario National Class be defined as:
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All persons and entities, except Excluded Persons and members of
the Quebec Class, who, while resident in Canada at the time,
purchased Nortel common stock or call options on Norte) common
stock or wrote (sold) put options on Nortel common stock during
the Class Period.
4. THIS COURT ORDERS that Peter Gallardi be and is hereby appointed as the representative plaintiff
for the Ontario National Class.
5. THIS COURT ORDERS that the Ontario National Action is certified of a class proceeding for the
purpose of settlement on the basis of the following common issuer
Did Nortel make false or misleading statements or omissions
concerning its financial performance or its revenue and earnings
during the Class Period?
6. THIS COURT ORDERS that the Settlement Approval Motion and the motion by Ontario National Class
Counsel for approval of Ontario National Class Counsel Fees shall be heard by this Court on a date
to be set by the Registrar, approximately 90 days from the date set herein for the mailing of the
notice at the Court House at 361 University Avenue, Toronto, Ontario.
7. THIS COURT ORDERS that each potential member of the Ontario National Class who elects to opt out
of the Ontario National Class must do so by writing a letter, signed by such person, clearly
requesting exclusion and clearly indicating the name, address and telephone number of the person
seeking to opt out and the date(s), price(s), and number(s) of shares of all purchases of Nortel
common stock or call options on Nortel common stock and of all put options of Nortel common stock
written (sold) during the Class Period, and sending it by first class mail post marked no later
than 60 days after the date set herein for the mailing of the Notice, to the address indicated in
the Notice.
8. THIS COURT ORDERS that any potential member of the Ontario National Class who does not opt out
in accordance with paragraph 7 of this Order shall be bound by any future
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Orders in the Ontario National Action, and shall be bound by the terms of the Settlement if
approved by each of the Courts in each of the Actions.
9. THIS COURT ORDERS that any potential member of the Ontario National Class who opts out of the
Ontario National Class in accordance with paragraph 7 of this Order may no longer participate in
the Settlement or any continuation of the Nortel II Actions, shall not be entitled to file a Proof
of Claim as provided in paragraph 19 of this Order, shall not be entitled to receive any payment
out of the Settlement and shall not be entitled to object to the approval of the Settlement as
provided in paragraph 21 of this Order,
10. THIS COURT ORDERS that The Garden City Group, Inc. is hereby appointed and approved as the
Claims Administrator, and shall be subject to the jurisdiction of this Court for all matters
relating to the Ontario National Action, including the administration, interpretation, effectuation
or enforcement of the Settlement Agreement and this Order.
11. THIS COURT ORDERS that the Escrow Agent, acting in its capacity as escrow agent, shall be
subject to the jurisdiction of this Court in respect of the Gross Cash Settlement Fund.
12. THIS COURT ORDERS that the form and content of the Notice, substantial y in the form attached
hereto as Schedule “B”, is hereby approved.
13. THIS COURT ORDERS that the form and content of the Proof of Claim form, substantially in the
form attached hereto as Schedule “C”, is hereby approved.
14. THIS COURT ORDERS that the plan of dissemination of the Notice substantially in the manner
described in the Notice Plan attached to this Order as Schedule “D” is hereby approved.
15. THIS COURT ORDERS that upon approval of the Notice and the Proof (1)f Claim and the appointment
of The Garden City Group, Inc. as the Claims Administrator by the Courts, the
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Claims Administrator shall cause the Notice and the Proof of Claim, substantially in the forms
attached as Schedules “B” and “C” to this Order, to be mailed, by first class mail, postage
prepaid, on or before 14 days after entry of the last order by any of the courts in the Nortel II
Actions and the Nortel I Actions (as defined in the Stipulation) approving the Notice applicable to
that proceeding who can be identified with reasonable effort, in accordance with the Notice Plan.
16. THIS COURT ORDERS that additional copies of the Notice shall be made available to any record
holder requesting such for the purpose of distribution to beneficial owners, and such record
holders shall be reimbursed from the Gross Settlement Fund (as defined in the Stipulation), upon
receipt by the Claims Administrator of proper documentation, for the reasonable expense of sending
the Notice and Proof of Claim to beneficial owners.
17. THIS COURT ORDERS that Ontario National Class Counsel shall, at or *fore the hearing of the
Settlement Approval Motion, file with the Court proof of mailing of the Notice and Proof of Claim.
18. THIS COURT ORDERS that the form of Publication Notice in substantially the form and content
attached hereto as Schedule “E” is hereby approved, and directs that Claims Administrator shall
cause the Publication Notice to be published in accordance with the Notice Plan, which publication
shall begin within ten (10) days of the mailing of tie Notice, and Ontario National Class Counsel
shall, at or before the hearing of the Settlement Approval Motion, file with this Court proof of
the publication of the Publication Notice.
19. THIS COURT ORDERS that in order to be entitled to participate i the Net Settlement Fund (as
defined in the Stipulation), each Ontario National Class Member shall take the following actions
and be subject to the following conditions:
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A properly executed Proof of Claim, substantially in the form attached hereto
as Schedule “C”, must be submitted to the Claims Administrator, at the Post Office Box
indicated in the Notice, postmarked not later than 120 days after the date set herein
for the mailing of the Notice. Such deadline may be further extended by order of this
Court. |
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Each Proof of Claim shall be deemed to have been submitted when postmarked (if
properly addressed and mailed by first class mail, postage prepaid) provided such Proof
of Claim is actually received prior to the motion for an order of this Court approving
distribution of the Net Settlement Fund. |
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Any Proof of Claim submitted in any other manner shall be deemed to have been
submitted when it was actually received at the address designated in the Notice. |
20. THIS COURT ORDERS that the Proof of Claim submitted by each Ontario National Class Member must
satisfy the following conditions:
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it must be properly completed, signed and submitted in a timely manner in
accordance with the provisions of the preceding paragraph; |
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it must be accompanied by adequate supporting documentation for the
transactions reported therein, in the form of broker confirmation slips, broker account
statements, an authorized statement from the broker containing the transactional
information found in a broker confirmation slip, or such other documentation as is
deemed adequate by the Claims Administrator; |
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if the person executing the Proof of Claim is acting in a representative
capacity, a certification of his current authority to act on behalf of the Ontario
National Class Member must be included in the Proof of Claim; and |
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the Proof of Claim must be complete and contain no material deletions or
modifications of any of the printed matter contained therein and must be signed under
penalty of perjury. |
21. THIS COURT ORDERS that, as part of the Proof of Claim, each Ontario National Class Member shall
submit to the jurisdiction of this Court with respect to the claim submitted, and shall (subject to
the approval of the Settlement by the Courts) release all Settled Claims against the Released
Parties.
22. THIS COURT ORDERS that Ontario National Class Members who wish to (file with the Court an
objection or comment to the Settlement or to the approval of Ontario National Class
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Counsel Fees shall deliver a written submission to the Claims Administrator at the address
indicated in the Notice, no later than 60 days after the date set herein for the mailing of the
Notice , and the Claims Administrator shall file all such submissions with the Court prior to the
hearing of the Settlement Approval Motion.
23. THIS COURT ORDERS that if (a) the Settlement is terminated by Nortel ‘pursuant to the
Supplemental Agreement and paragraph 26 in the Stipulation; (b) any specified condition to the
Settlement set forth in the Stipulation is not satisfied and any of the Representative Plaintiffs
or Nortel elect(s) to terminate the Settlement as provided in paragraph 25 in the Stipulation; or
(c) the Settlement is terminated pursuant to paragraph 27 of the Stipulation, then: (i) this Order,
including the certification of the action as a class proceeding for the purpose of settlement,
shall be set aside and be of no further force or effect, and without prejudice to any party; (ii)
each party to the Ontario National Action` shall be restored to his, her or its respective position
in the litigation as it existed immediately prior to the execution of the Settlement Agreement; and
(iii) this Action shall be decertified s a class proceeding pursuant to Section 10 of the Class
Proceedings Act, 1992, without prejudice to the Plaintiff’s ability to reapply for certification.
24. THIS COURT ACKNOWLEDGES having been notified that a determination of fairness of the Settlement
at the Settlement Approval Hearing will be relied upon b Nortel for an exemption, pursuant to
Section 3(a)(10) of the United States Securities Act of 1933, as amended, 15 U.S.C. § 77c(a)(1), to
enable the Gross Settlement Shares to be distributed to Class Members, and to counsel for the
Representative Plaintiffs as may be awarded by the respective Courts for counsel fees, without
registration and compliance with the prospectus delivery requirements of U.S. securities laws.
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25. THIS COURT DECLARES that Schedule “A” hereto satisfies the requirements of subsections 8(1)(c)
and (d) of the Class Proceedings Act, 1992.
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EXHIBIT E
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CANADA
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(CLASS ACTION) |
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PROVINCE OF QUÉBEC
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SUPERIOR COURT |
DISTRICT OF MONTREAL |
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NO: 500-06-000277-059
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CLIFFORD W. SKARSTEDT |
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Petitioner |
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-v. |
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CORPORATION NORTEL NETWORKS |
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Respondent |
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and |
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FONDS D’AIDE AUX RECOURS |
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COLLECTIFS |
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Mis en cause |
ORDER
THIS MOTION made by the Petitioner for a Judgment authorizing the bringing of the class action
for the purpose of settlement pursuant to the Stipulation and Agreement of Settlement (the
“Settlement Agreement”) entered into between the Petitioner and the Respondent was heard this day.
ON READING the materials filed, including the Settlement Agreement (and the exhibits/schedules
thereto) attached to this Order as Schedule “A”, and on hearing the submissions of counsel for the
Petitioner and counsel for the Respondent:
1. THIS COURT ORDERS AND DECLARES that for the purposes of this Order the following definitions
apply and are incorporated into this Order:
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(a) |
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"Claims Administrator” means the entity approved by this Court pursuant to
paragraph 10 to administer the Settlement; |
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(b) |
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"Class Members” means members of the Ontario National Class, the Quebec Class
and the U.S. Global Class; |
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(c) |
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"Class Period” means the period of time between April 24, 2003 through April
27, 2004, inclusive; |
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(d) |
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"Courts” means the Ontario Court, the Quebec Court and the U.S. Court; |
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(e) |
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"Defendant” means the Respondent, Corporation Nortel Networks; |
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(f) |
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"Escrow Agent” has the meaning set forth in the Stipulation; |
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(g) |
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"Excluded Persons” means Nortel and the Individuals, members of any of the
Individuals’ immediate families, any entity in which Nortel or any of the Individuals
has a controlling interest or is a parent or subsidiary of or is controlled by Nortel,
and the officers, directors, affiliates, legal representatives, heirs, predecessors,
successors or assigns of any of Nortel and the Individuals; |
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(h) |
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"Gross Cash Settlement Fund” has the meaning set forth in the Stipulation; |
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(i) |
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"Gross Settlement Fund” has the meaning set forth in the Stipulation; |
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(j) |
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"Gross Settlement Shares” means 314,333,875 shares of common stock of Nortel to
be issued by Nortel, pursuant to the Settlement, as may be adjusted in accordance with
paragraph 4(d) of the Stipulation; |
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(k) |
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"Individuals” means Frank A. Dunn, Douglas Beatty, Michael Gollogly, John
Edward Cleghorn, Robert Ellis Brown, Robert Alexander Ingram, Guylaine Saucier,
Sherwood Hubbard Smith, Jr., James Kinney (Finance Chief for Nortel’s Wireless Networks
Division, Richardson, Texas), Ken Taylor (Vice President for Nortel’s Enterprise
Networks Division, Raleigh, North Carolina), Craig Johnson (Finance Director for
Nortel’s Wireline Networks Division, Richardson, Texas), Doug Hamilton (Finance
Director for Nortel’s Optical Networks Group, Montreal, Quebec), Michel Gasnier (Vice
President of Finance for Europe), Robert Ferguson (Vice President of Finance for
China), and William Bowrey (Controller for Asia); |
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(l) |
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"Nortel” means the Respondent, Corporation Nortel Networks; |
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(m) |
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"Nortel II Actions” means the Ontario National Action, the Quebec Action and
the U.S. Action; |
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(n) |
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"Nortel II Defendants” means Nortel, Frank A. Dunn, Douglas Beatty, Michael
Gollogly, John Edward Cleghorn, Robert Ellis Brown, Robert Alexander Ingram, Guylaine
Saucier, Sherwood Hubbard Smith, Jr. and Deloitte & Touche LLP; |
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(o) |
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"Notice” means the global notice to the classes in the Nortel II Actions
substantially in the form attached as Schedule “B” to this Order, as approved in
paragraph 12 of this Order; |
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(p) |
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"Notice Plan” means the plan for the publication and dissemination of the
Notice, Publication Notice and Proof of Claim by the Claims Administrator, attached as
Schedule “D” to this Order; |
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(q) |
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"Ontario Court” means the Ontario Superior Court of Justice; |
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(r) |
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"Ontario National Action” means the proceeding in the Ontario Superior Court of
Justice, Gallardi v. Nortel Networks Corporation et al., Court File No. 05-CV-285606CP; |
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(s) |
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"Ontario National Class” means all persons, except Excluded Persons and except
members of the Quebec Class, who, while resident in Canada at the time, purchased
Nortel common stock or call options on Nortel common stock or wrote (sold) put options
on Nortel common stock during the Class Period; |
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(t) |
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"Proof of Claim” means the form substantially in the form attached as Schedule
“C” to this Order, as approved in paragraph 13 of this Order; |
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(u) |
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"Publication Notice” means the summary notice of certification and proposed
settlement, and of the hearing of the Settlement Approval Motion, substantially in the
form attached as Schedule “E” to this Order, as approved in paragraph 18 of this Order; |
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(v) |
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"Quebec Action” means this proceeding; |
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(w) |
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"Quebec Class” means all persons and entities, except Excluded Persons who,
while resident in Quebec at the time, purchased Nortel common stock or call options on
Nortel common stock or wrote (sold) Nortel put options on Nortel common stock during
the Class Period. For purposes of the definition of Quebec Class, an entity means a
legal person established for a private interest, a partnership or an association if at
all times during the 12-month period preceding February 18, 2005, not more than 50
persons bound to it by contract of employment were under its direction or control and
if it is dealing at arm’s length with the representative of the Quebec Class; |
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(x) |
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"Quebec Class Counsel” means Trudel & Johnston; |
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(y) |
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"Quebec Class Counsel Fees” means the fees, disbursements, costs, GST, and
other applicable taxes or charges of Quebec Class Counsel; |
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(z) |
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"Quebec Class Member” means a member of the Quebec Class who does not opt out
of, or request exclusion from, the Quebec Class in the manner set forth in this Order; |
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(aa) |
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"Quebec Court” means the Superior Court of Quebec; |
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(bb) |
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"Released Parties” means any and all of the Nortel II Defendants, their past or
present subsidiaries, parents, principals, affiliates, general or limited partners or
partnerships, successors and predecessors, heirs, assigns, officers, directors, agents,
employees, attorneys, advisors, investment advisors, investment bankers, underwriters,
insurers, co-insurers, re-insurers, attorneys, accountants, auditors, consultants,
administrators, executors, trustees, personal representatives, immediate family members
and any person, firm, trust, partnership, corporation, officer, director or other
individual or entity in which any Nortel II Defendant has a controlling interest or
which is related to or affiliated with any of the Nortel II Defendants, and the legal
representatives, heirs, executors, administrators, trustees, successors in interest or
assigns of the Nortel II Defendants; |
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(cc) |
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"Representative Plaintiffs” means, collectively, the representative or lead
plaintiffs in each of the Nortel II Actions; |
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(dd) |
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"Settled Claims” means any and all claims, debts, demands, rights or causes of
action, suits, matters, and issues or liabilities whatsoever (including, but not
limited to, any claims for damages, interest, attorneys’ fees, expert or consulting
fees, and any other costs, expenses or liability whatsoever), whether based on United
States or Canadian federal, state, provincial, local, statutory or common law or any
other law, rule or regulation, whether fixed or contingent, accrued or unaccrued,
liquidated or unliquidated, at law or in equity, matured or un-matured, whether class
or individual in nature, including both known claims and Unknown Claims, (i) that have
been asserted in any of the Nortel II Actions against any of the Released Parties, or
(ii) that could have been asserted in any forum by the Class Members in the Nortel II
Actions, or any of them, against any of the Released Parties, that arise out of or are
based upon the allegations, transactions, facts, matters or occurrences,
representations or omissions involved, set forth, or referred to in the Nortel II
Actions and that relate to the purchase of Nortel common stock or call options or the
sale of Nortel put options during the Class Period or (iii) any oppression or other
claims under the Canada Business Corporations Act, R.S.C. 1985, c. C-44, as amended,
that arise out of or are based upon the allegations, transactions, facts, matters or
occurrences, representations or omissions, set forth or referred to in the Nortel II
Actions. Settled Claims does not mean or include claims, if any, against the Released
Parties arising under the United States Employee Retirement Income Security Act of
1974, as amended, 29 U.S.C. § 1001, et seq. (“ERISA”) that are not common to all Class
Members and which ERISA claims are the subject of an action pending before the Judicial
Panel on Multidistrict Litigation, denominated In re Nortel Networks |
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Securities and “ERISA’ Litigation, MDL Docket No. 1537. Settled Claims further does not include:
(a) the action in Rohac et al. v. Nortel Networks et al, Ontario Superior Court of
Justice, Court File No. 04-CV-3268; and (b) the application brought in Indiana
Electrical Workers Pension Trust Fund IBEW and Laborers Local 100 and 397 Pension
Fund v. Nortel Networks Corporation, Ontario Superior Court of Justice, Court File
No. 49059, for leave pursuant to the Canada Business Corporations Act to commence a
representative action in the name of and on behalf of Nortel against certain of the
Released Parties; |
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(ee) |
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"Settlement Agreement” means the Settlement Agreement and Confirmation of
Stipulation and Agreement of Settlement, including the Stipulation attached thereto,
entered into between the Plaintiff herein and Nortel, through their counsel dated June
___, 2006, which is attached to this Order as Schedule “A”; |
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(ff) |
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"Settlement” means the proposed settlement of the Nortel II Actions pursuant to
the terms set forth in the Settlement Agreement adopting and ratifying the Stipulation; |
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(gg) |
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"Settlement Approval Motion” means the motion for final approval of the
Settlement by this Court to be heard at the date, time and location described in
paragraph 6 of this Order; |
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(hh) |
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"Stipulation” means the Stipulation and Agreement of Settlement attached to the
Settlement Agreement as Schedule “A”; |
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(ii) |
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"Supplemental Agreement” means the agreement referred to in paragraph 23 of the
Stipulation setting forth certain conditions under which the Settlement may be
terminated by Nortel if potential Class Members who purchase in excess of a certain
number of Nortel common stock or options on Nortel common stock during the Class Period
exclude themselves from the Class; |
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(jj) |
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"Unknown Claims” means any and all Settled Claims which any of the
Representative Plaintiffs, or Class Members does not know or suspect to exist in his,
her or its favour at the time of the release of the Released Parties which if known by
him, her or it might have affected his, her or its decision(s) with respect to the
Settlement; |
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(kk) |
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"U.S. Action” means the proceeding in the United States Federal District Court
for the Southern District of New York, In re Nortel Networks Corp. Securities
Litigation, Master File No. 05-MD-1659 (LAP); |
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(ll) |
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"U.S. Court” means the U.S. Federal District Court for the Southern District of
New York; and |
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(mm) |
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"U.S. Global Class” means all persons, except Excluded Persons, who purchased
Nortel common stock or call options on Nortel common stock or wrote (sold) put options
on Nortel common stock (collectively, “Nortel Securities”) during the Class Period, and
who suffered damages thereby, including, but not limited to, those persons or entities
who traded in Nortel Securities on the New York Stock Exchange and/or the Toronto Stock
Exchange. |
2. THIS COURT ORDERS that the bringing of the Quebec Action as a class action be authorized for the
purpose of settlement.
3. THIS COURT ORDERS that the Quebec Class be defined as:
All persons and entities, except Excluded Persons who, while
resident in Quebec at the time, purchased Nortel common stock or
call options on Nortel common stock or wrote (sold) Nortel put
options on Nortel common stock during the Class Period. For
purposes of the definition of Quebec Class, an entity means a legal
person established for a private interest, a partnership or an
association if at all times during the 12-month period preceding
February 18, 2005, not more than 50 persons bound to it by contract
of employment were under its direction or control and if it is
dealing at arm’s length with the representative of the Quebec Class.
4. THIS COURT ORDERS that Clifford W. Skarstedt be and is hereby appointed as the representative
for the Quebec Class.
5. THIS COURT ORDERS that the bringing of the Quebec Action as a class action is authorized for the
purpose of settlement only, on the basis of the following common issue:
Did Nortel make false or misleading statements or omissions
concerning its financial performance or its revenue and earnings
during the Class Period?
6. THIS COURT ORDERS that the Settlement Approval Motion and the motion by Quebec Class Counsel for
approval of Quebec Class Counsel Fees shall be heard by this Court on , 2006, at
___:___.m. at the Montreal Court House, located at 1, Notre-Dame Street East, Montreal, Quebec.
7. THIS COURT ORDERS that each potential member of the Quebec Class who elects to opt out of the
Quebec Class must do so by writing a letter, signed by such person, clearly requesting exclusion
and clearly indicating the name, address and telephone number of the person seeking to opt out and
the date(s), price(s), and number(s) of shares of all purchases of Nortel common stock or call
options on Nortel common stock and of all put options of Nortel common stock written (sold) during
the Class Period, and sending it by first class mail post marked no later than , 2006, to the
address indicated in the Notice.
8. THIS COURT ORDERS that any potential member of the Quebec Class who does not opt out in
accordance with paragraph 7 of this Order shall be bound by any future Orders in the Quebec Action,
and shall be bound by the terms of the Settlement if approved by each of the Courts in each of the
Nortel II Actions.
9. THIS COURT ORDERS that any potential member of the Quebec Class who opts out of the Quebec Class
in accordance with paragraph 7 of this Order may no longer participate in the Settlement or any
continuation of the Nortel II Actions, shall not be entitled to file a Proof of Claim as provided
in paragraph 20 of this Order, shall not be entitled to receive any payment out of the Settlement
and shall not be entitled to object to the approval of the Settlement as provided in paragraph 22
of this Order.
10. THIS COURT ORDERS that The Garden City Group, Inc. is hereby appointed and approved as the
Claims Administrator, and shall be subject to the jurisdiction of this Court for all matters
relating to the Quebec Action, including the administration, interpretation, effectuation or
enforcement of the Settlement Agreement and this Order.
11. THIS COURT ORDERS that the Escrow Agent acting in its capacity as escrow agent, shall be
subject to the jurisdiction of this Court in respect of the Gross Cash Settlement Fund.
12. THIS COURT ORDERS that the form and content of the Notice, substantially in the form attached
hereto as Schedule “B”, is hereby approved.
13. THIS COURT ORDERS that the form and content of the Proof of Claim form, substantially in the
form attached hereto as Schedule “C”, is hereby approved.
14. THIS COURT ORDERS that the plan of dissemination of the Notice in the manner described in the
Notice Plan attached to this Order as Schedule “D”, is hereby approved.
15. THIS COURT ORDERS that upon approval of the Notice and the Proof of Claim and the appointment
of The Garden City Group, Inc. as the Claims Administrator by the Courts, the Claims Administrator
shall cause the Notice and the Proof of Claim, substantially in the forms attached as Schedules “B”
and “C” to this Order, to be mailed, by first class mail, postage prepaid, on or before , 2006,
to all of the Quebec Class Members who can be identified with reasonable effort, in accordance with
the Notice Plan.
16. THIS COURT ORDERS that additional copies of the Notice shall be made available to any record
holder requesting such for the purpose of distribution to beneficial owners, and such record
holders shall be reimbursed from the Gross Settlement Fund (as defined in the Stipulation), upon
receipt by the Claims Administrator of proper documentation, for the reasonable expense of sending
the Notice and Proof of Claim to beneficial owners.
17. THIS COURT ORDERS that Quebec Class Counsel shall, at or before the hearing of the Settlement
Approval Motion, file with the Court proof of mailing of the Notice and Proof of Claim.
18. THIS COURT ORDERS that the form of Publication Notice in substantially the form and content
attached hereto as Schedule “E” is hereby approved, and directs that Claims Administrator shall
cause the Publication Notice to be published in accordance with the Notice Plan, which publication
shall begin within ten (10) days of the mailing of the Notice, and Quebec Class Counsel shall, at
or before the hearing of the Settlement Approval Motion, file with this Court proof of the
publication of the Publication Notice.
19. THIS COURT ORDERS that in order to be entitled to participate in the Net Settlement Fund (as
defined in the Stipulation), each Quebec Class Member shall take the following actions and be
subject to the following conditions:
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(a) |
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A properly executed Proof of Claim, substantially in the form attached hereto
as Schedule “C”, must be submitted to the Claims Administrator, at the Post Office Box
indicated in the Notice, postmarked not later than , 2006. Such deadline
may be further extended by order of this Court. |
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(b) |
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Each Proof of Claim shall be deemed to have been submitted when postmarked (if
properly addressed and mailed by first class mail, postage prepaid) provided such Proof
of Claim is actually received prior to the motion for an order of this Court approving
distribution of the Net Settlement Fund (as defined in the Stipulation). |
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(c) |
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Any Proof of Claim submitted in any other manner shall be deemed to have been
submitted when it was actually received at the address designated in the Notice. |
20. THIS COURT ORDERS that the Proof of Claim submitted by each Quebec Class Member must satisfy
the following conditions:
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(a) |
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it must be properly completed, signed and submitted in a timely manner in
accordance with the provisions of the preceding paragraph; |
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(b) |
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it must be accompanied by adequate supporting documentation for the
transactions reported therein, in the form of broker confirmation slips, broker account
statements, an authorized statement from the broker containing the transactional
information found in a broker confirmation slip, or such other documentation as is
deemed adequate by the Claims Administrator; |
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(c) |
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if the person executing the Proof of Claim is acting in a representative
capacity, a certification of his current authority to act on behalf of the Quebec Class
Member must be included in the Proof of Claim; and |
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(d) |
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the Proof of Claim must be complete and contain no material deletions or
modifications of any of the printed matter contained therein and must be signed under
penalty of perjury. |
21. THIS COURT ORDERS that, as part of the Proof of Claim, each Quebec Class Member shall submit to
the jurisdiction of this Court with respect to the claim submitted, and shall (subject to the
approval of the Settlement by the Courts) release all Settled Claims against the Released Parties.
22. THIS COURT ORDERS that Quebec Class Members who wish to file with the Court an objection or
comment to the Settlement or to the approval of Quebec Class Counsel Fees shall deliver a written
submission to the Claims Administrator at the address indicated in the Notice, no later than ,
2006, and Claims Administrator shall file all such submissions with the Court prior to the hearing
of the Settlement Approval Motion.
23. THIS COURT ORDERS that if (a) the Settlement is terminated by Nortel pursuant to the
Supplemental Agreement and paragraph 26 in the Stipulation; (b) any specified condition to the
Settlement set forth in the Stipulation is not satisfied and any of the Representative Plaintiffs
or Nortel elect(s) to terminate the Settlement as provided in paragraph 25 in the Stipulation; or
(c) the Settlement is termination pursuant to paragraph 27 of the Stipulation, then: (i) this
Order, including the authorization of the bringing of the Quebec Action as a class action for the
purpose of settlement, shall be set aside and be of no further force or effect, and without
prejudice to any party; (ii) each party to the Quebec Action shall be restored to his, her or its
respective position in the litigation as it existed immediately prior to the execution of the
Settlement Agreement; and (iii) this Action
authorizing the bringing of the class action shall be annulled pursuant to the Code of Civil
Procedure, without prejudice to the Petitioner’s ability to reapply for certification.
24. THIS COURT ACKNOWLEDGES having been notified that a determination of fairness of the Settlement
at the Settlement Approval Hearing will be relied upon by Nortel for an exemption, pursuant to
Section 3(a)(10) of the United States Securities Act of 1933, as amended, 15 U.S.C. § 77c(a)(1), to
enable the Gross Settlement Shares to ‘be distributed to Class Members, and to counsel for the
Representative Plaintiffs as may be awarded by the respective Courts for counsel fees, without
registration and compliance with the prospectus delivery requirements of U.S. securities laws.
EXHIBIT F
Court File No. 05-CV-285606CP
ONTARIO
SUPERIOR COURT OF JUSTICE
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THE HONOURABLE SENIOR
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DAY, THE DAY |
REGIONAL JUSTICE WINKLER
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OF , 2006 |
BETWEEN:
PETER GALLARDI
Plaintiff
- and –
NORTEL NETWORKS CORPORATION, FRANK A. DUNN
DOUGLAS BEATTY, MICHAEL GOLLOGLY,
JOHN EDWARD CLEGHORN, ROBERT ELLIS BROWN,
ROBERT ALEXANDER INGRAM, GUYLAINE SAUCIER,
SHERWOOD HUBBARD SMITH, JR. and DELOITTE & TOUCHE LLP
Defendants
Proceedings under the Class Proceeding Act, 1992
ORDER
THIS MOTION made by the Plaintiff for an Order approving the Settlement Agreement and
Confirmation of Stipulation of Agreement of Settlement (the “Settlement Agreement”) entered into
between the Plaintiffs and the Defendant, Nortel Networks Corporation, approving Ontario National
Class Counsel Fees and for declaratory relief, was heard this day at 361 University Avenue,
Toronto, Ontario.
ON READING the materials filed, including the Settlement Agreement attached to this Order as
Schedule “A”, and on hearing the submissions of counsel for the Plaintiff and counsel for the
Defendants:
1. THIS COURT DECLARES that for the purposes of this Order the following definitions apply and are
incorporated into this Order:
1
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(a) |
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“Certification Order” means the Order certifying this action as a class
proceeding dated June ___2006; |
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(b) |
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“Claims Administrator” means The Garden City Group, Inc.; |
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(c) |
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“Class Members” means members of the Ontario National Class, the Quebec Class
and the U.S. Global Class; |
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(d) |
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“Class Period” means the period of time between April 24, 2003 through April
27, 2004, inclusive; |
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(e) |
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“Courts” means this Court, the Superior Court of Quebec and the United States
Federal District Court for the Southern District of New York; |
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(f) |
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“Defendants” means the persons and entities named as defendants in the Ontario
National Action; |
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(g) |
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“Derivative Application” application brought in Indiana Electrical Workers
Pension Trust Fund IBEW and Laborers Local 100 and 397 Pension Fund v. Nortel Networks
Corporation, Ontario Superior Court of Justice, Court File No. 49059, for leave
pursuant to the Canada Business Corporations Act to commence a representative action in
the name of and on behalf of Nortel against certain of the Released Parties; |
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(h) |
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“Effective Date” means the date upon which the Settlement contemplated by the
Settlement Agreement shall become effective, as provided in paragraph 24 of the
Stipulation; |
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(i) |
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“Escrow Agent” has the meaning set forth in the Stipulation; |
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(j) |
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“Excluded Persons” means: (i) Nortel and the Individual Defendants; (ii) the
Other Individuals; (iii) members of any of the Individual Defendants’ immediate
families; (iv) any entity in which Nortel or any of the Individuals Defendants or the
Other Individuals has a controlling interest; (v) any parent, subsidiary or affiliate
of Nortel; (vi) any person who was an officer or directors of Nortel or any of its
subsidiaries or affiliates during the Class Period; and (vii) legal representatives,
heirs, predecessors, successors or assigns of any of the Excluded Persons; |
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(k) |
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“Gross Settlement Fund” has the meaning set forth in the Stipulation; |
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(l) |
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“Gross Settlement Shares” means 314,333,875 shares of common stock of Nortel to
be issued by Nortel, pursuant to the Settlement, as may be adjusted in accordance with
paragraph 4(d) of the Stipulation; |
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(m) |
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“Individual Defendants” means Frank A. Dunn, Douglas Beatty, Michael Gollogly,
John Edward Cleghorn, Robert Ellis Brown, Robert Alexander Ingram, Guylaine Saucier and
Sherwood Hubbard Smith, Jr.; |
2
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(n) |
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“Nortel” means the Defendant, Nortel Networks Corporation; |
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(o) |
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“Nortel I Actions” means the following proceedings in Canada and the U.S.: |
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(i) |
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Frohlinger v. Nortel Networks Corporation et al., Ontario
Superior Court of Justice, Court File No. 02-CL-4605; |
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(ii) |
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Association de Protection des Epargnants et Investisseurs du
Quebec v. Corporation Nortel Networks, Superior Court of Quebec, District of
Montreal, No.: 500-06-000126-017; |
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(iii) |
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Jeffery et al. v. Nortel Networks Corporation et al., Supreme
Court of British Columbia, Vancouver Registry Court File No. S015159; and |
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(iv) |
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In re Nortel Networks Corp. Securities Litigation, Consolidated
Civil Action No. 01-CV-1855 (RMB); |
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(p) |
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“Nortel II Actions” means the Ontario National Action, the Quebec Action and
the U.S. Action; |
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(q) |
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“Nortel II Defendants” means Nortel, the Individual Defendants and Deloitte &
Touche LLP; |
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(r) |
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“Ontario National Action” means this proceeding; |
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(s) |
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“Ontario National Class Counsel” means Rochon Genova LLP and Lerners LLP; |
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(t) |
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“Ontario National Class Counsel Fees” means the fees, disbursements, costs,
GST, and other applicable taxes or charges of Ontario National Class Counsel, as
approved by this Court in this Order; |
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(u) |
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“Ontario National Class” means all persons, except Excluded Persons and except
members of the Quebec Class, who, while resident in Canada at the time, purchased
Nortel common stock or call options on Nortel common stock or wrote (sold) put options
on Nortel common stock during the Class Period; |
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(v) |
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“Ontario National Class Member” means a member of the Ontario National Class
who has not opted out of the Ontario National Class in accordance with the
Certification Order; |
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(w) |
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“Other Actions” means actions or proceedings, other than the Proceedings,
relating to Settled Claims commenced by an Ontario National Class Member against one or
more Released Parties; |
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(x) |
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“Other Individuals” means James Kinney (Finance Chief for Nortel’s Wireless
Networks Division, Richardson, Texas), Ken Taylor (Vice President for Nortel’s
Enterprise Networks Division, Raleigh, North Carolina), Craig Johnson (Finance |
3
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Director for Nortel’s Wireline Networks Division, Richardson, Texas), Doug Hamilton (Finance
Director for Nortel’s Optical Networks Group, Montreal, Quebec), Michel Gasnier (Vice
President of Finance for Europe), Robert Ferguson (Vice President of Finance for
China), and William Bowrey (Controller for Asia); |
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(y) |
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“Plan of Allocation” means the plan of allocation set forth in the Notice of
Certification in Canada and Proposed Settlements of Class Actions, Motion for
Attorneys’ Fees and Settlement Fairness Hearings and attached as Schedule “B” to this
Order; |
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(z) |
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“Proceedings” means the Ontario National Action, the Quebec Action, the U.S.
Action and the Nortel I Actions; |
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(aa) |
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“Quebec Action” means the proceeding in the Superior Court of Quebec (District
of Montreal), Clifford W. Skarstedt v. Corporation Nortel Networks, No:
500-06-000277-059; |
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(bb) |
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“Quebec Class” means all persons and entities, except Excluded Persons who,
while resident in Quebec at the time, purchased Nortel common stock or call options on
Nortel common stock or wrote (sold) Nortel put options on Nortel common stock during
the Class Period. For purposes of this definition, an entity means a legal person
established for a private interest, a partnership or an association if at all times
during the 12-month period preceding February 18, 2005, not more than 50 persons bound
to it by contract of employment were under its direction or control and if it is
dealing at arm’s length with the representative of the Quebec Class; |
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(cc) |
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“Released Parties” means any and all of the Nortel II Defendants, their past or
present subsidiaries, parents, principals, affiliates, general or limited partners or
partnerships, successors and predecessors, heirs, assigns, officers, directors, agents,
employees, attorneys, advisors, investment advisors, investment bankers, underwriters,
insurers, co-insurers, re-insurers, accountants, auditors, consultants, administrators,
executors, trustees, personal representatives, immediate family members and any person,
firm, trust, partnership, corporation, officer, director or other individual or entity
in which any Nortel II Defendant has a controlling interest or which is related to or
affiliated with any of the Nortel II Defendants, and the legal representatives, heirs,
executors, administrators, trustees, successors in interest or assigns of the Nortel H
Defendants; |
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(dd) |
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“Representative Plaintiffs” means, collectively, the representative or lead
plaintiffs in each of the Canadian Actions and the U.S. Action; |
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(ee) |
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“Settled Claims” means any and all claims, debts, demands, rights or causes of
action, suits, matters, and issues or liabilities whatsoever (including, but not
limited to, any claims for damages, interest, attorneys’ fees, expert or
consulting fees, and any other costs, expenses or liability whatsoever), whether based on |
4
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United States or Canadian federal, state, provincial, local, statutory or common law or any
other law, rule or regulation, whether fixed or contingent, accrued or unaccrued,
liquidated or unliquidated, at law or in equity, matured or un-matured, whether class
or individual in nature, including both known claims and Unknown Claims, (i) that have
been asserted in any of the Nortel II Actions against any of the Released Parties, or
(ii) that could have been asserted in any forum by the Class Members in the Nortel II
Actions, or any of them, against any of the Released Parties, that arise out of or are
based upon the allegations, transactions, facts, matters or occurrences,
representations or omissions involved, set forth, or referred to in the Nortel II
Actions and that relate to the purchase of Nortel common stock or call options or the
sale of Nortel put options during the Class Period or (iii) any oppression or other
claims under the Business Corporations Act, R.S.C. 1985, c. C-44, as amended, that
arise out of or are based upon the allegations, transactions, facts, matters or
occurrences, representations or omissions, set forth or referred to in the Nortel II
Actions. “Settled Claims” does not mean or include claims, if any, against the
Released Parties arising under the United States Employee Retirement Income Security
Act of 1974, as amended, 29 U.S.C. § 1001, et seq. (“ERISA”) that are not common to all
Class Members and which ERISA claims are the subject of an action pending before the
Judicial Panel on Multidistrict Litigation, denominated In re Nortel Networks
Securities and “ERISA” Litigation, MDL Docket No. 1537. Settled Claims further does
not include: (a) the action in Rohac et al v. Nortel Networks et al, Ontario Superior
Court of Justice, Court File No. 04-CV-3268; and (b) the Derivative Application; |
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(ff) |
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“Settled Defendants’ Claim” means any and all claims, rights or causes of
action or liabilities whatsoever, whether based on federal, provincial, local,
statutory or common law or any other law, rule or regulation, including both known
claims and Unknown Claims, that have been or could have been asserted in the Nortel II
Actions or any forum by the Nortel II Defendants or any of them or the successors and
assigns or any of them against the Representative Plaintiffs, any Class Member, or
their counsel, and that arise out of or relate in any way to the institution,
prosecution, or settlement of the Nortel II Actions (except Settled Defendants’ Claims
does not include all claims, rights or causes of action or liabilities whatsoever
related to the enforcement of the Settlement including, without limitation, any of the
terms of the Stipulation or orders or judgments issued by the Courts in connection with
the Settlement, confidentiality obligations or in respect of the Derivative
Application); |
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(gg) |
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“Settlement Agreement” means the Settlement Agreement and Confirmation of
Stipulation and Agreement of Settlement, including the Stipulation attached thereto,
entered into between the Plaintiffs and Nortel, dated as of June 20, 2006, attached to
this Order as Schedule “A”; |
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(hh) |
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“Settlement” means the proposed settlement of the Nortel II Actions pursuant to
the terms set forth in the Settlement Agreement adopting and ratifying the Stipulation; |
5
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(ii) |
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“Stipulation” means the Stipulation and Agreement of Settlement attached to the
Settlement Agreement as Schedule “A”. |
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(jj) |
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“Supplemental Agreement” means the agreement referred to in paragraph 23 of the
Stipulation setting forth certain conditions under which the Settlement may be
terminated by Nortel if potential Class Members who purchase in excess of a certain
number of Nortel common stock or options on Nortel common stock during the Class Period
exclude themselves from the Class; |
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(kk) |
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“Unknown Claims” means any and all Settled Claims which any of the
Representative Plaintiffs, or Class Members does not know or suspect to exist in his,
her or its favour at the time of the release of the Released Parties and any Settled
Defendants’ Claims which any Nortel II Defendant does not know or suspect to exist in
his, her or its favour, which if known by him, her or it might have affected his, her
or its decision(s) with respect to the Settlement; |
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(ll) |
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“U.S. Action” means the proceeding in the United States Federal District Court
for the Southern District of New York, In re Nortel Networks Corp. Securities
Litigation, Master File No. 05-MD-1659 (LAP); and |
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(mm) |
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“U.S. Global Class” means all persons, except Excluded Persons, who purchased
Nortel common stock or call options on Nortel common stock or wrote (sold) put options
on Nortel common stock (collectively, “Nortel Securities”) during the Class Period, and
who suffered damages thereby, including, but not limited to, those persons or entities
who traded in Nortel Securities on the New York Stock Exchange and/or the Toronto Stock
Exchange. |
2. THIS COURT DECLARES that the Settlement Agreement is fair, reasonable and in the best interests
of the Ontario National Class.
3. THIS COURT ORDERS that the Settlement Agreement attached to this Order as Schedule “A” is hereby
approved pursuant to s. 29 of the Class Proceedings Act, 1992.
4. THIS COURT DECLARES that the Settlement Agreement is binding upon the representative Plaintiff,
upon all Ontario National Class Members, and upon the Defendants, including those persons who are
minors or mentally incapable, and that the requirements of Rules 7.04(1) and 7.08(4) of the Rules
of Civil Procedure are dispensed with in respect of the Ontario National Action.
5. THIS COURT ORDERS that, upon the Effective Date, the Plaintiff herein and each of the Ontario
National Class Members, on behalf of themselves, their personal representatives, heirs, executors,
administrators, trustees, successors and assigns, are hereby permanently barred and enjoined from
instituting, commencing or prosecuting any Settled Claims against the Released Parties.
6. THIS COURT ORDERS AND DECLARES that, upon the Effective Date, the Plaintiff herein and each of
the Ontario National Class Members, on behalf of themselves, their personal representatives, heirs,
executors, administrators, trustees, successors and assigns shall release and
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shall be conclusively deemed to have fully, finally and forever released the Released Parties from the Settled Claims.
7. THIS COURT ORDERS that, upon the Effective Date, the Plaintiff herein and each of the Ontario
National Class Members and their respective personal representatives, heirs, executors,
administrators, trustees, successors and assigns, shall not institute, continue, maintain or
assert, either directly or indirectly, whether in the United States, Canada or elsewhere, on their
own behalf or on behalf of any class or any other person, any action, suit, cause of action, claim
or demand against any Released Party or any other person who may claim any form of contribution or
indemnity (save for a contractual indemnity) from any Released Party in respect of any Settled
Claim or any matter related thereto, at any time on or after the Effective Date, and are enjoined
from doing so.
8. THIS COURT ORDERS that, upon the Effective Date, the defendants Nortel, John Edward Cleghorn,
Robert Ellis Brown, Robert Alexander Ingram, Guylaine Saucier and Sherwood Hubbard Smith, Jr. on
behalf of themselves and their personal representatives, heirs, executors, administrators,
trustees, successors and assigns, are hereby permanently barred and enjoined from prosecuting a
Settled Defendants’ Claim against the Plaintiff herein, the Ontario National Class Members or
Ontario National Class Counsel. In the event that any of the Released Parties assert against the
Plaintiffs, any Ontario National Class Member or the Ontario National Class Counsel, any claim that
is a Settled Defendants’ Claim, then the Plaintiff, such Class Member or Ontario National Class
Counsel, as the case may be, shall be entitled to use and assert such factual matters included
within the Settled Claims only against such Released Party in defence of such claim but not for the
purposes of asserting any claim against any Released Party.
9. THIS COURT ORDERS AND DECLARES that each Ontario National Class Member shall consent and shall
be deemed to have consented to the dismissal of any Other Actions he, she or it has commenced
against the Released Parties, without costs and with prejudice.
10. THIS COURT ORDERS that neither this Order, the Settlement Agreement, the Stipulation, nor any
of their terms and provisions, nor any of the negotiations or proceedings connected with it, nor
any of the documents or statements referred to therein shall be:
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offered or received against the Defendants as evidence of or construed as or
deemed to be evidence of any presumption, concession, or admission by any of the
Defendants with respect to the truth of any fact alleged in the Statement of Claim as
amended or the validity of any claim that has been or could have been asserted in the
Ontario National Action or in any litigation, or the deficiency of any defence that has
been or could have been asserted in the Ontario National Action or in any litigation,
or of any liability, negligence, fault, or wrongdoing of the Defendants; |
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offered or received against the Defendants as evidence of a presumption,
concession or admission of any fault, misrepresentation or omission with respect to any
statement or written document approved or made by any Defendant; |
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offered or received against the Defendants as evidence of a presumption,
concession or admission with respect to any liability, negligence, fault or wrongdoing,
or in any way referred to for any other reason as against any of the Defendants, in any
other civil, criminal or administrative action or proceeding, other than such
proceedings as may be necessary to enforce and give effect to the provisions of the
Settlement Agreement (provided, however, that Defendants may refer to it to effectuate
the release and liability protection granted them hereunder); |
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construed against the Defendants as an admission or concession that the
consideration to be given hereunder represents the amount which could be or would have
been recovered after trial; or |
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construed as or received in evidence as an admission, concession or presumption
against the Plaintiff or any of the Ontario National Class Members that any of their
claims are without merit, or that any defences asserted by the Defendants have any
merit, or that damages recoverable under the Statement of Claim as amended would not
have exceeded the amounts set forth under the Settlement Agreement. |
11. THIS COURT ORDERS that the Plan of Allocation is approved as fair and reasonable.
12. THIS COURT ORDERS that Ontario National Class Counsel Fees in the amount of $ in
cash, and shares, which includes $ for disbursements, and which amounts this
Court finds to be fair and reasonable, are hereby approved.
13. THIS COURT ORDERS that the Ontario National Class Counsel Fees shall be paid out of the Gross
Settlement Fund.
14. THIS COURT ORDERS that this Court shall retain jurisdiction over the parties herein, the
Ontario National Class Members, the Claims Administrator and the Escrow Agent for all matters
relating to the Ontario National Action, including the administration, interpretation, effectuation
or enforcement of the Settlement Agreement and this Order, and including any application for fees
and expenses by the Ontario National Class Counsel and the Claims Administrator incurred in
overseeing and administering the Settlement, in distributing settlement proceeds to the Ontario
National Class Members, and in complying with the terms of this Order and the Certification Order.
15. THIS COURT ORDERS that, on notice to the Court but without further order of the Court, the
parties to the Settlement Agreement may agree to reasonable extensions of time to carry out any of
the provisions of the Settlement Agreement.
16. THIS COURT ORDERS AND DECLARES that the Released Parties have no responsibility for and no
liability whatsoever with respect to the administration of the Settlement.
17. THIS COURT RECOGNIZES & ACKNOWLEDGES that: (i) one of the effects of its determination that the
Settlement Agreement is fair is that, pursuant to Section 3(a)(10) of the United States Securities
Act of 1933, as amended, 15 U.S.C. § 77c(a)(1), the Gross Settlement
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Shares may be distributed to
Class Members, and to counsel for the plaintiffs in the Nortel I Actions as may be awarded by the
respective Courts for counsel fees, without registration and compliance with the prospectus
delivery requirements of U.S. securities laws; and (ii) Nortel will rely on such Section 3(a)(10)
exemption (and Nortel will not register the Gross Settlement Shares under the United States
Securities Act of 1933) based on this Court’s approval of the fairness of the Settlement.
18. THIS COURT DECLARES that all of the Ontario National Class Members to whom it is proposed to
issue Gross Settlement Shares have had the right to appear at the hearing on the fairness of the
Settlement Agreement, and that adequate notice of this hearing has been provided to Ontario
National Class Members in accordance with the terms of the Certification Order.
19. THIS COURT ORDERS that if (a) the Settlement Agreement is terminated by Nortel pursuant to the
Supplemental Agreement and paragraph 26 of the Stipulation; (b) any specified condition to the
Settlement set forth in the Stipulation is not satisfied and any of the Lead Plaintiffs or Nortel
elect(s) to terminate the Settlement Agreement as provided in paragraph 25 of the Stipulation; or
(c) the Settlement Agreement is otherwise terminated pursuant to paragraph 27 of the Stipulation,
then, in any such event:
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this Order (except for paragraphs 1, 10, 14, 16, 17, 18 and 19 herein) shall be
set aside, be of no further force or effect, and be without prejudice to any party; |
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the Certification Order (except for paragraph 24), shall be set aside and be of
no further force or effect, and without prejudice to any party; |
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the Ontario National Action shall be immediately decertified as a class
proceeding pursuant to Section 10 of the Class Proceedings Act, 1992, without prejudice
to the Plaintiff’s ability to reapply for certification; and |
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each party to the Ontario National Action shall be restored to his, her or its
respective position as it existed immediately prior to the execution of the Settlement
Agreement. |
20. THIS COURT ORDERS AND ADJUDGES that any appeal or challenge affecting the approval of the Plan
of Allocation or this Court’s approval of Ontario National Counsel Fees shall in no way disturb or
affect the balance of this Order and shall be deemed to be separate and apart from the balance of
this Order.
21. THIS COURT ORDERS AND ADJUDGES that, upon the Effective Date, the Ontario National Action be
and is hereby dismissed against the Defendants with prejudice and without costs.
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PETER GALLARDI
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NORTEL NETWORKS CORPORATION
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Court File No: 05-CV-285606CP |
Plaintiff
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and
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et al. |
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Defendants |
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ONTARIO |
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SUPERIOR COURT OF JUSTICE |
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Proceeding commenced at Toronto |
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ORDER |
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10
EXHIBIT G
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CANADA
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(CLASS ACTION) |
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PROVINCE OF QUÉBEC
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SUPERIOR COURT |
DISTRICT OF MONTREAL |
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NO : 500-06-000277-059
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CLIFFORD W. SKARSTEDT |
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Representative |
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- v. - |
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CORPORATION NORTEL NETWORKS |
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Defendant |
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and |
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FONDS D’AIDE AUX RECOURS |
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COLLECTIFS |
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Mis en cause |
ORDER
THIS MOTION made by the Representative for an Order approving the Settlement Agreement and
Confirmation of Stipulation of Agreement of Settlement (the “Settlement Agreement”) entered into
between the Plaintiffs and the Defendant, Nortel Networks Corporation, approving Quebec Class
Counsel Fees and for declaratory relief, was heard this day.
ON READING the materials filed, including the Settlement Agreement attached to this Order as
Schedule “A”, and on hearing the submissions of counsel for the Representative and counsel for the
Defendant:
1. THIS COURT DECLARES that for the purposes of this Order the following definitions apply and are
incorporated into this Order:
2
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“Authorization Order” means the Order authorizing the bringing of the class
action for the purpose of settlement dated June ___, 2006; |
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“Canadian Actions” means the Ontario National Action, the British Columbia
Action and the Quebec Action; |
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(c) |
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“Claims Administrator” means The Garden City Group, Inc.; |
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(d) |
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“Class Members” means members of the Ontario National Class, the Quebec Class
and the U.S. Global Class; |
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“Class Period” means the period of time between April 24, 2003 through April
27, 2004, inclusive; |
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“Courts” means this Court, the Ontario Supreme Court of Justice and the United
States Federal District Court for the Southern District of New York; |
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“Defendant” means Corporation Nortel Networks; |
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“Derivative Application” application brought in Indiana Electrical Workers
Pension Trust Fund IBEW and Laborers Local 100 and 397 Pension Fund v. Nortel Networks
Corporation, Ontario Superior Court of Justice, Court File No. 49059, for leave
pursuant to the Canada Business Corporations Act to commence a representative action in
the name of and on behalf of Nortel against certain of the Released Parties; |
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“Effective Date” means the date upon which the Settlement contemplated by the
Settlement Agreement shall become effective, as provided in paragraph 24 of the
Stipulation; |
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“Escrow Agent” has the meaning set forth in the Stipulation; |
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“Excluded Persons” means Nortel and the Individuals, members of any of the
Individuals’ immediate families, any entity in which Nortel or any of the Individuals
has a controlling interest or is a parent or subsidiary of or is controlled by Nortel,
and the officers, directors, affiliates, legal representatives, heirs, predecessors,
successors or assigns of any of Nortel and the Individuals; |
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“Gross Settlement Fund” has the meaning set forth in the Stipulation; |
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“Gross Settlement Shares” means 314,333,875 shares of common stock of Nortel to
be issued by Nortel, pursuant to the Settlement, as may be adjusted in accordance with
paragraph 4(d) of the Stipulation; |
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“Individuals” means Frank A. Dunn, Douglas Beatty, Michael Gollogly, John
Edward Cleghorn, Robert Ellis Brown, Robert Alexander Ingram, Guylaine Saucier,
Sherwood Hubbard Smith, Jr., James Kinney (Finance Chief for Nortel’s Wireless Networks
Division, Richardson, Texas), Ken Taylor (Vice President for |
3
Nortel’s Enterprise Networks Division, Raleigh, North Carolina), Craig Johnson
(Finance Director for Nortel’s Wireline Networks Division, Richardson, Texas), Doug
Hamilton (Finance Director for Nortel’s Optical Networks Group, Montreal, Quebec),
Michel Gasnier (Vice President of Finance for Europe), Robert Ferguson (Vice
President of Finance for China), and William Bowrey (Controller for Asia);
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“Nortel” means the Defendant, Nortel Networks Corporation; |
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“Nortel I Actions” means the following proceedings in Canada and the U.S.: |
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Frohlinger v. Nortel Networks Corporation et al., Ontario
Superior Court of Justice, Court File No. 02-CL-4605; |
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Association de Protection des Épargnants et Investisseurs du
Québec v. Corporation Nortel Networks, Superior Court of Quebec, District of
Montreal, No. 500-06-000126-017; |
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Jeffery et al. v. Nortel Networks Corporation et al., Supreme
Court of British Columbia, Vancouver Registry Court File No. S015159; and |
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In re Nortel Networks Corp. Securities Litigation, Consolidated
Civil Action No. 2001-CV-1855 (RMB); |
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“Nortel II Actions” means the Ontario National Action, the Quebec Action and
the U.S. Action; |
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“Nortel H Defendants” Nortel, Frank A. Dunn, Douglas Beatty, Michael Gollogly,
John Edward Cleghorn, Robert Ellis Brown, Robert Alexander Ingram, Guylaine Saucier,
Sherwood Hubbard Smith, Jr. and Deloitte & Touche LLP; |
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“Ontario National Action” means the proceeding in the Ontario Superior Court of
Justice, Gallardi v. Nortel Networks Corporation et al., Court File No. 05-CV-285606CP; |
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“Ontario National Class” means all persons, except Excluded Persons and except
members of the Quebec Class, who, while resident in Canada at the time, purchased
Nortel common stock or call options on Nortel common stock or wrote (sold) put options
on Nortel common stock during the Class Period; |
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“Other Actions” means actions or proceedings, other than the Proceedings,
relating to Settled Claims commenced by a Quebec Class Member against one or more
Released Parties; |
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“Plan of Allocation” means the plan of allocation set forth Notice of
Certification in Canada and Proposed Settlements of Class Actions, Motion for
Attorneys’ Fees and Settlement Fairness Hearings and attached as Schedule “B” to this
Order; |
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“Proceedings” means the Ontario National Action, the Quebec Action, the U.S.
Action and the Nortel I Actions; |
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“Quebec Action” means this proceeding; |
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“Quebec Class” means all persons and entities, except Excluded Persons who,
while resident in Quebec at the time, purchased Nortel common stock or call options on
Nortel common stock or wrote (sold) Nortel put options on Nortel common stock during
the Class Period. For purposes of the definition of Quebec Class, an entity means a
legal person established for a private interest, a partnership or an association if at
all times during the 12-month period preceding February 18, 2005, not more than 50
persons bound to it by contract of employment were under its direction or control and
if it is dealing at arm’s length with the representative of the Quebec Class; |
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“Quebec Class Counsel” means Trudel & Johnston; |
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“Quebec Class Counsel Fees” means the fees, disbursements, costs, GST, and
other applicable taxes or charges of Quebec Class Counsel; |
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“Quebec Class Member” means a member of the Quebec Class who has not opted out
of, or requested exclusion from, the Quebec Class in accordance with the Authorization
Order; |
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“Released Parties” means any and all of the Nortel II Defendants, their past or
present subsidiaries, parents, principals, affiliates, general or limited partners or
partnerships, successors and predecessors, heirs, assigns, officers, directors, agents,
employees, attorneys, advisors, investment advisors, investment bankers, underwriters,
insurers, co-insurers, re-insurers, accountants, auditors, consultants, administrators,
executors, trustees, personal representatives, immediate family members and any person,
firm, trust, partnership, corporation, officer, director or other individual or entity
in which any Nortel II Defendant has a controlling interest or which is related to or
affiliated with any of the Nortel II Defendants, and the legal representatives, heirs,
executors, administrators, trustees, successors in interest or assigns of the Nortel II
Defendants; |
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“Representative Plaintiffs” means, collectively, the representative or lead
plaintiffs in each of the Canadian Actions and the U.S. Action; |
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(ee) |
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“Settled Claims” means any and all claims, debts, demands, rights or causes of
action, suits, matters, and issues or liabilities whatsoever (including, but not
limited to, any claims for damages, interest, attorneys’ fees, expert or consulting
fees, and any other costs, expenses or liability whatsoever), whether based on United
States or Canadian federal, state, provincial, local, statutory or common law or any
other law, rule or regulation, whether fixed or contingent, accrued or unaccrued,
liquidated or unliquidated, at law or in equity, matured or un-matured, whether class
or individual in nature, including both known claims and unknown |
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claims, (i) that have been asserted in any of the Nortel II Actions against any of
the Released Parties, or (ii) that could have been asserted in any forum by the
Class Members in the Nortel II Actions, or any of them, against any of the Released
Parties, that arise out of or are based upon the allegations, transactions, facts,
matters or occurrences, representations or omissions involved, set forth, or
referred to in the Nortel II Actions and that relate to the purchase of Nortel
common stock or call options or the sale of Nortel put options during the Class
Period or (iii) any oppression or other claims under the Canada Business
Corporations Act, R.S.C. 1985, c. C-44, as amended, that arise out of or are based
upon the allegations, transactions, facts, matters or occurrences, representations
or omissions, set forth or referred to in the Nortel II Actions. Settled Claims
does not mean or include claims, if any, against the Released Parties arising under
the United States Employee Retirement Income Security Act of 1974, as amended, 29
U.S.C. § 1001, et seq. (“ERISA”) that are not common to all Class Members and which
ERISA claims are the subject of an action pending before the Judicial Panel on
Multidistrict Litigation, denominated In re Nortel Networks Securities and “ERISA”
Litigation, MDL Docket No. 1537. Settled Claims also does not include: (a) the
action in Rohac et al. v. Nortel Networks et al, Ontario Superior Court of Justice,
Court File No. 04-CV- 3268; and (b) the Derivative Application;
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“Settled Defendants’ Claim” means any and all claims, rights or causes of
action or liabilities whatsoever, whether based on federal, provincial, local,
statutory or common law or any other law, rule or regulation, including both known
claims and unknown claims, that have been or could have been asserted in the Nortel II
Actions or any forum by the Nortel II Defendants or any of them or the successors and
assigns or any of them against the Representative Plaintiffs, any Class Member, or
their counsel, and that arise out of or relate in any way to the institution,
prosecution, or settlement of the Nortel II Actions (except for claims or proceedings
to enforce the Settlement including, without limitation, any of the terms of the
Stipulation or orders or judgments issued by the Courts in connection with the
Settlement, confidentiality obligations or in respect of the Derivative Application); |
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“Settlement Agreement” means the Settlement Agreement and Confirmation of
Stipulation and Agreement of Settlement, including the Stipulation attached as Schedule
“A” thereto, entered into between the Plaintiffs and Nortel, through their counsel,
dated as of June ___, 2006, attached to this Order as Schedule “A”; |
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“Settlement” means the proposed settlement of the Nortel II Actions pursuant to
the terms set forth in the Stipulation; |
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(ii) |
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“Stipulation” means the Stipulation and Agreement of Settlement attached to the
Settlement Agreement as Schedule “A”; |
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“Supplemental Agreement” means the agreement referred to in paragraph 23 of the
Stipulation setting forth certain conditions under which the Settlement may be
terminated by Nortel if potential Class Members who purchase in excess of a certain
number of Nortel common stock or options on Nortel common stock during the Class Period
exclude themselves from the Class; |
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“Unknown Claims” means any and all Settled Claims which any of the
Representative Plaintiffs, or Class Members does not know or suspect to exist in his,
her or its favour at the time of the release of the Released Parties and any Settled
Defendants’ Claims which any Nortel II Defendant does not know or suspect to exist in
his, her or its favour, which if known by him, her or it might have affected his, her
or its decision(s) with respect to the Settlement; |
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“U.S. Action” means the proceeding in the United States Federal District Court
for the Southern District of New York, In re Nortel Networks Corp. Securities
Litigation, Master File No. 05-MD-1659 (LAP); and |
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“U.S. Global Class” means all persons, except Excluded Persons, who purchased
Nortel common stock or call options on Nortel common stock or wrote (sold) put options
on Nortel common stock (collectively, “Nortel Securities”) during the Class Period, and
who suffered damages thereby, including, but not limited to, those persons or entities
who traded in Nortel Securities on the New York Stock Exchange and/or the Toronto Stock
Exchange, |
2. THIS COURT DECLARES that the Settlement Agreement is fair, reasonable and in the best interests
of the Quebec Class.
3. THIS COURT ORDERS that the Settlement Agreement attached to this Order as Schedule “A” is hereby
approved pursuant to Article 1025 of the Code of Civil Procedure.
4. THIS COURT DECLARES that the Settlement Agreement is binding upon the Representative, upon all
Quebec Class Members, and upon the Defendant, including those persons who are minors or mentally
incapable.
5. THIS COURT ORDERS that, upon the Effective Date, the Representative herein and each of the
Quebec Class Members, on behalf of themselves, their personal representatives, heirs, executors,
administrators, trustees, successors and assigns, are hereby permanently barred
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and enjoined from instituting, commencing or prosecuting any Settled Claims against the Released
Parties.
6. THIS COURT ORDERS AND DECLARES that, upon the Effective Date, the Representative herein and each
of the Quebec Class Members, on behalf of themselves, their personal representatives, heirs,
executors, administrators, trustees, successors and assigns shall release and shall be conclusively
deemed to have fully, finally and forever released the Released Parties from the Settled Claims.
7. THIS COURT ORDERS that, upon the Effective Date, the Plaintiff herein and each of the Quebec
Class Members and their respective personal representatives, heirs, executors, administrators,
trustees, successors and assigns, shall not institute, continue, maintain or assert, either
directly or indirectly, whether in the United States, Canada or elsewhere, on their own behalf or
on behalf of any class or any other person, any action, suit, cause of action, claim or demand
against any Released Party or any other person who may claim any form of contribution or indemnity
(save for a contractual indemnity) from any Released Party in respect of any Settled Claim or any
matter related thereto, at any time on or after the Effective Date, and are enjoined from doing so.
8. THIS COURT ORDERS that, upon the Effective Date, the Defendant Nortel, on behalf of itself and
its personal representatives, heirs, executors, administrators, trustees, successors and assigns is
hereby permanently barred and enjoined from prosecuting a Settled Defendants’ Claim against the
Representative herein, the Quebec Class Members or Quebec Class Counsel. In the event that any of
the Released Parties assert against the Representative, any Quebec Class Member or the Quebec Class
Counsel, any claim that is a Settled Defendants’ Claim, then the
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Representative, such Class Member or Quebec Class Counsel, as the case may be, shall be entitled to
use and assert such factual matters included within the Settled Claims only against such Released
Party in defence of such claim but not for the purpose of asserting any claim against any Released
Party.
9. THIS COURT ORDERS AND DECLARES that each Quebec Class Member shall consent and shall be deemed
to have consented to the dismissal of any Other Actions he, she or it has commenced against the
Released Parties, without costs and with prejudice.
10. THIS COURT ORDERS that neither this Order, the Settlement Agreement, the Stipulation, nor any
of their terms and provisions, nor any of the negotiations or proceedings connected with it, nor
any of the documents or statements referred to therein shall be:
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offered or received against the Defendant as evidence of or construed as or
deemed to be evidence of any presumption, concession, or admission by the Defendant
with respect to the truth of any fact alleged in the Quebec Action or the validity of
any claim that has been or could have been asserted in the Quebec Action or in any
litigation, or the deficiency of any defence that has been or could have been asserted
in the Quebec Action or in any litigation, or of any liability, negligence, fault, or
wrongdoing of the Defendant; |
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offered or received against the Defendant as evidence of a presumption,
concession or admission of any fault, misrepresentation or omission with respect to any
statement or written document approved or made by the Defendant; |
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(c) |
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offered or received against the Defendant as evidence of a presumption,
concession or admission with respect to any liability, negligence, fault or wrongdoing,
or in any way referred to for any other reason as against the Defendant, in any other
civil, criminal or administrative action or proceeding, other than such proceedings as
may be necessary to enforce and give effect to the provisions of the Settlement
Agreement (provided, however, that Defendant may refer to it to effectuate the release
and liability protection granted them hereunder); |
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(d) |
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construed against the Defendant as an admission or concession that the
consideration to be given hereunder represents the amount which could be or would have
been recovered after trial; or |
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(e) |
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construed as or received in evidence as an admission, concession or presumption
against the Representative or any of the Quebec Class Members that any of their claims
are without merit, or that any defences asserted by the Defendant have any merit, or
that damages recoverable under the Quebec Action would not have exceeded the amounts
set forth under the Settlement Agreement. |
11. THIS COURT ORDERS that the Plan of Allocation is approved as fair and reasonable.
12. THIS COURT ORDERS that Quebec Class Counsel Fees in the amount of $ in cash, and
shares, which includes $ for disbursements, and which amounts this Court finds
to be fair and reasonable, are hereby approved.
13. THIS COURT ORDERS that the Quebec Class Counsel Fees shall be paid out of the Gross Settlement
Fund.
14. THIS COURT ORDERS that this Court shall retain jurisdiction over the parties herein, the Quebec
Class Members, the Claims Administrator and the Escrow Agent for all matters relating to the Quebec
Action, including the administration, interpretation, effectuation or enforcement of the Settlement
Agreement and this Order, and including any application for fees and expenses by the Quebec Class
Counsel and the Claims Administrator incurred in overseeing and administering the Settlement, in
distributing settlement proceeds to the Quebec Class Members, and in complying with the terms of
this Order and the Authorization Order.
15. THIS COURT ORDERS that, on notice to the Court but without further order of the Court, the
parties to the Settlement Agreement may agree to reasonable extensions of time to carry out any of
the provisions of the Settlement Agreement.
16. THIS COURT ORDERS AND DECLARES that the Released Parties have no responsibility for and no
liability whatsoever with respect to the administration of the Settlement.
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17. THIS COURT RECOGNIZES & ACKNOWLEDGES that: (i) one of the effects of its determination that
the Settlement Agreement is fair is that, pursuant to Section 3(a)(10) of the United States
Securities Act of 1933, as amended, 15 U.S.C. § 77c(a)(1), the Gross Settlement Shares may be
distributed to Class Members, and to counsel for the plaintiffs in the Nortel I Actions as may be
awarded by the respective Courts for counsel fees, without registration and compliance with the
prospectus delivery requirements of U.S. securities laws; and (ii) Nortel will rely on such Section
3(a)(10) exemption (and Nortel will not register the Gross Settlement Shares under the United
States Securities Act of 1933) based on this Court’s approval of the fairness of the Settlement.
18. THIS COURT DECLARES that all Quebec Class Members to whom it is proposed the Settlement
Agreement, and that adequate notice of this hearing has been provided to Quebec Class Members in
accordance with the terms of the Authorization Order.
19. THIS COURT ORDERS that if (a) the Settlement is terminated by Nortel pursuant to the
Supplemental Agreement and paragraph 26 of the Stipulation; (b) any specified condition to the
Settlement set forth in the Stipulation is not satisfied and any of the Representative Plaintiffs
or Nortel elect(s) to terminate the Settlement as provided in paragraph 25 of the Stipulation; or
(c) the Settlement Agreement is otherwise terminated pursuant to paragraph 27 of the Stipulation,
then, in any such event:
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(a) |
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this Order (except for paragraphs 1, 10, 14, 16, 17, 18 and 19 herein) shall be
set aside, be of no further force or effect, and be without prejudice to any party; |
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(b) |
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the Authorization Order (except for paragraph 24), shall be set aside, of no
further force or effect, and without prejudice to any party; |
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(c) |
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the judgment authorizing the bringing of the class action shall be annulled
pursuant to the Code of Civil Procedure; and |
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(d) |
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each party to the Quebec Action shall be restored to his, her or its respective
position as it existed immediately prior to the execution of the Settlement Agreement. |
20. THIS COURT ORDERS AND ADJUDGES that any appeal or challenge, to the extent any such right
exists, affecting the approval of the Plan of Allocation or this Court’s approval of Quebec Counsel
Fees shall in no way disturb or affect the balance of this Order and shall be deemed to be separate
and apart from the balance of this Order.
21. THIS COURT ORDERS AND ADJUDGES that, upon the Effective Date, the Quebec Action be and is
hereby dismissed against the Defendant with prejudice and without costs.